A television commercial on medical insurance is still fresh in my mind. A patient who suffers a heart attack recovers but on seeing his hospital bill, gets a shock and suffers another attack. Solution: mediclaim. Not quite. If you are a senior citizen aged 75 or above, you cannot get fresh medical insurance. In most policies, ironically called ‘Senior Citizens’ Red Carpet’ plan, the premium is much higher and the sum insured much lower. The maximum amount that can be claimed is only 70 per cent of the insured sum. Co-payment is not all. There are exclusions for pre-existing diseases, even though many are silent killers with no symptoms. Then comes a further cap on the most common cause of hospitalisation and death in India – cardiac ailments.
Break it down mathematically. If your policy is for Rs 5 lakh, you can claim only up to Rs 3.5 lakh. If it is a cardiac related procedure or surgery, the limit is Rs 2.75 lakh. Break it down logically. Those who live on pensions or meagre savings or are dependent on children who can afford less, must pay more as premium, and get less as insurance settlement. If a senior citizen couple’s annual mediclaim premium is about fifty thousand rupees, would it not be more prudent to invest this in a fixed deposit and build their own medical fund than to depend upon an insurance claim? If premium is paid for 5 years, this itself would exceed the capped amount! What is the probability of hospitalisation for a heart problem falling within the insurance limit? Break it down legally. The Insurance Regulatory Development Authority (IRDA) has allowed the creation of two classes of citizens – Senior Citizens and Others, with the former discriminated against in every possible manner.
One of the key objectives of the IRDA when it was constituted following the recommendations of the Malhotra Committee, which opened up insurance to the private sector, was to “enhance customer satisfaction through increased consumer choice and lower premiums.” Under Section 14(2)(b) of the Insurance Regulatory Development Authority Act, one of its duties is to ensure “protection of the interests of policy holders.” Reality bites in the fine print – with exclusions, exceptions and caps. Will the Right to Life under Article 21 of the Constitution have any meaning if medical insurance or quality treatment is kept out of the reach of senior citizens? Will Article 14 on the Right to Equality or Article 15 on the Right against Discrimination have any meaning if senior citizens are treated differently from other age groups? Will Article 47 on the State’s duty to improve public health have any meaning if the twain between actual hospital bills and insurance claim settlement seldom meet? The Supreme Court in CESC Ltd. Vs Subhash Chandra Bose observed that “the term health implies more than an absence of sickness” but “a state of complete physical, mental and social well being.”
Apart from legal remedies against insurance companies under the Consumer Protection Act, the IRDA, covered under ‘State’ under Article 12, is amenable to writ jurisdiction. The Supreme Court in Biman Krishna Bose Vs United India Insurance Company held that “even in an area of contractual relations, the State and its instrumentalities are enjoined with the obligations to act with fairness. Arbitrariness should not appear in their actions or decisions.” On the point of renewal of a policy as opposed to taking a fresh policy that would exclude pre existing disease, the court was categorical. “If the mediclaim policy cannot be renewed with retrospective effect, it would give a handle to the insurance company to refuse the renewal of the policy on extraneous consideration.” The “disastrous effect” of wrongful refusal of renewal, it ruled, must be remedied.
From the standpoint of the insurance company, the risk factor for a senior citizen is much higher. The Supreme Court in Alopi Parshad & Sons Vs Union of India had held that “there is no general liberty to absolve a party from liability to perform his part of the contract, merely because on account of an uncontemplated turn of events, the performance of the contract may become onerous.” In a welfare state, shouldn’t we evolve a scheme where working individuals who can afford higher premium pay more; and retired folks who cannot, pay less? Or introduce a mandatory deduction from salaries towards medical insurance as they do in the West? Matters of life and death cannot always be left to market forces.