Diabetes can make you an untouchable, for Insurance companies!!

India is home to thirty-five million people with diabetes which is nearly 15 percent of the global diabetes burden, and projections show that this will increase to seventy million by 2025. Diabetes disproportionately affects people of working ages and accounts for US$2.2 billion (almost Rs. 10,000 crores) in annual health care costs in India alone.

(1) Because India has a population of 1.1 billion, 40 percent of whom are under age eighteen, investment in the health of India’s future workforce is crucial.

(2) Poorly controlled diabetes leads to complications, amplifying disability and mortality rates and leading to high direct, indirect, and intangible costs.

(3) If immediate multi sectoral action is not taken, diabetes threatens India’s emerging economy. Projections show that in the next decade, India will lose US$237 billion in national income due to diabetes, stroke, and heart disease, yet Indian policymakers do not yet perceive the epidemic as a priority.

(4) No wonder India is being called as the Diabetes Capital of the World.

If you are wondering what this passage from a research paper on diabetes is doing in a personal finance column, let me explain. As highlighted above one of the several costs that diabetes leads to are the hospitalization costs for diseases arising from diabetes such as Heart Disease, stroke and organ failure. But if you are already suffering from diabetes and are looking to buy a new mediclaim policy (or increase the coverage on your existing one) to meet such hospitalization costs, you will find the going quite tough.
In fact there has been a bunch of case laws relating to mediclaim policies leading all the way to the Supreme court where the,insurance,companies in a bunch of cases appealed against the high court orders disallowing them for denying mediclaim policies/non-renewal of mediclaim policies. The Supreme Court has ruled that public sector insurance companies cannot refuse to provide medical cover policies to those suffering from pre-existing diseases and said such an action was arbitrary, illegal and unconstitutional.

A bench of Justices S B Sinha and V S Sirpurkar also asked the Insurance Regulatory Development Authority to frame suitable guidelines to ensure that insurance companies, both from public sector and private sector, do not indulge in the unethical practice of denying medical insurance facility to the public. The Supreme Court said that public sector insurance companies, in particular, cannot indulge in such unhealthy practice as they are State’ within the meaning of Article 12 of the Constitution and was expected to be fair and reasonable in their dealings with the public.

IRDA has already issued a guideline (in the context of senior citizens but it will logically apply to all ) that any proposal for,health insurance which is denied on any grounds, should be made in writing with reasons furnished and recorded. They have further provided that such reasons should stand the scrutiny of reasonableness and fairness. The highest court in the land has already ruled that a denial on this basis cannot be considered reasonable.

So from a law and regulatory perspective the situation appears to be addressed to a large extent. But the actual ground situation is worrisome. From more than 20 general insurance companies in India with more than 40 medical insurance plans there is only plan, which is specially designed for diabetics (that too a limited cover policy only for Diabetes Type II).

This policy Diabetes Safe is offered by Star Health. The policy provides a maximum cover of Rs. 5 lakhs and covers one for Diabetic Retinopathy requiring laser treatment for eyes and Diabetic Nephropathy leading to chronic renal failure for kidney. Along with this it also covers Diabetic foot ulcer requiring micro-vascular surgical correction. These all are basically repercussions of Diabetes. This policy is available only for people who have been diagnosed with Diabetes Type  II.

To be fair at least two public sector companies namely New India Assurance and United India Insurance provide coverage for hospitalization expenses arising from diseases caused by diabetes (and/or hypertension) but with certain limitations and on payment of extra premium.

Most other insurance companies will provide coverage for such diseases only after a waiting period of 3-5 years. Even that would not be a problem if a patient suffering from diabetes was actually able to get the medical policy in the first place. In actual practice most companies (including those having special dispensation for diabetics) will deny a policy if a diabetic approaches them to buy one for the first time.

Very curiously the other not so favored class – the senior citizens, have it slightly better when it comes to those of them who are diabetics. There are two specific policies (from National Insurance and Star Health) meant for them where the policy is likely to be issued even if they are diabetics. (for details see table A). The reason is probably the very high co-payments (see box for what is co-payments) that ensure that the insured persons tries to keep the hospitalization expenses under control as he will also be bearing a significant part of those expenses.

Co-payment: Co-payment or co-pay is a payment that is defined in the insurance policy which is supposed to be paid by the insured person each time a claim occurs.

Table A

If a person is above the age of 60, then Star Health and National Insurance will offer them the following policy: –

Max age of entry

Max renewable age

Max Sum Assured

Co – Pay

Pre-existing disease coverage

Star Health – Red Carpet

69

Lifetime

200,000

30% for every claim, 50% if claim arises out of Pre-Existing diseases.

From inception of policy

National Insurance – Varistha Mediclaim

80

90

100,000

10% for every claim, 20% if claim arises out of Pre-Existing diseases.

Covered after one claim free policy year, Diabetes and Hypertension covered from inception on payment of extra premium

Clearly there is a big need to ensure that the laws and regulations that already exist are actually implemented in practice. In fact this will benefit the health insurance industry as well. Today a lot of consumers do not declare their diabetic status at the time of taking the first policy and where the claims arise only after a gap of many years it becomes difficult for the Insurance company to prove that the disease was pre-existing at the time of inception of the policy for the first time and the consumer had concealed facts while getting his first policy from them. A specific product with built in limitations such as co-payments (such as the one for senior citizens) but where availability is assured would avoid a lot of hassles for both the insurance company and the consumers.

So what should you do if you have diabetes and do not currently have medical policy coverage and are not being given a policy from any company. Well if you are otherwise in good health and have no other complications other than the diabetes you should get the rejection of your policy proposal in writing from the insurance company. This will help you in filing a complaint with the grievance cell of IRDA (complaints@irda.gov.in) or call the central grievance cell number 155255. You can also complain to the insurance ombudsman in your area (details are available on http://www.irdaindia.org/ins_ombusman.htm ). In any case all diabetics should prepare a nest egg to deal with medical emergencies.

And for god sake if you have a family history of diabetes please take a cover for yourself immediately before you get the disease and also make sure that your children have their own individual policies with sufficient amounts so that they too can benefit from a long history of no claims.

1. R. Shobhana et al., “Expenditure on Healthcare Incurred by Diabetic Subjects in a Developing Country—

A Study from Southern India,” Diabetes Research and Clinical Practice 48, no. 1 (2000): 37–42.

2. S. Leeder, Race against Time: The Challenge of Cardiovascular Disease in Developing Economies (New York: Columbia

University, Center for Global Health and Economic Development, 2004).

3. D. Yach, D. Stuckler, and K. Brownell, “Epidemiologic And Economic Consequences of the Global Epidemics

of Obesity and Diabetes,” NatureMedicine 12, no. 3 (2006): 62–66.

4. World Health Organization, Preventing ChronicDiseases: A Vital Investment (Geneva:WHO, 2005).

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