Kamath seeks mandatory health plans

MUMBAI: Banks and financial institutions (FIs) must have a positive interaction with the Central government on introducing mandatory saving schemes for health protection.

The key players in the domestic financial services sector could take up this matter for discussion prior to the announcement of the Union Budget in February ‘07, said ICICI Bank managing director and CEO KV Kamath at a seminar in Mumbai organised by ICICI Prudential Life Insurance Company.

Citing Singapore as an ideal role model, Mr Kamath pointed out that only 3.8% of the gross domestic product of Singapore is spent on health. He explained that schemes such as Medisave, Medishield and Medifund instill a personal sense of responsibility within individuals towards saving for health purposes. Healthcare in Singapore is financed by a combination of taxes, employee medical benefits, compulsory savings in the form of Medisave, insurance and out-of-pocket payment.

Speaking on the growing incidence of diabetes within the Indian population, Mr Kamath indicated that India has the potential to draw on learnings from other developed countries in the form of customer education, financial incentives, ensuring a proactive management and evidence-based treatment of complications. He reiterated that while the share of the Indian government on health expenditure has declined over the past couple of years, the focus should be on the spread of primary healthcare in underserved regions.

Delivering a special address at the symposium on how India can take charge of the diabetes challenge, professor CK Prahalad of the University of Michigan said that traditionally insurance has always been viewed as an instrument of mitigating risks and not managing one’s health. He highlighted that India has the largest number of grassroot organisations in the form of self-help groups, which could be used for dispensing multiple functions such as education, distribution and generation of ideas.

Speaking on healthcare expenditure, Mr Prahalad said that the total cost to the consumer always exceeds the cost of the actual product or service. Hence, ensuring a personalised routine for each customer, variable pricing and economic incentivisation and an eco-system that comprises multiple vendors could help in improving the reach of insurance companies.

Mr Prahalad added that in a market like India, companies only look for individual transactions rather than fostering long-term relationships, but insurance companies can look at developing their reach much wider and at a faster pace by entering into partnerships with pharma companies, diagnostic clinics, hospitals, food chains et al.

Explaining that neither subsidies nor philanthropic activities could serve as sustainable models for improving rural health standards, Mr Prahalad said the success could emerge only by practising viable business models and principles. The management guru stressed that the Indian consumer is clearly becoming more value-conscious and is willing to shell out more funds for a quality product.

On Saturday, ICICI Prudential Insurance launched the country’s first insurance programme designed specially for diabetics. ICICI Pru’s plan is a collaborative effort with health care providers aimed at preventing health complications arising out of diabetics and in case they do occur, the policy provides cash benefits aimed at meeting those expenses.