GST relief not enough to make health insurance affordable, say experts | BS Events

Speaking in a panel discussion titled “GST Rationalisation Done. What Next for Affordable Health Insurance?,” Amit Roy, Partner and Leader, Insurance & Allied Business at PwC; G Srinivasan, Managing Director and Chief Executive Officer of Galaxy Health Insurance; and S Prakash, CEO, Health Insurance Ecosystem and Strategic Partnerships at the General Insurance Council, discussed the reforms needed to make health insurance more accessible.

In conversation with Business Standard’s Aathira Varier, the panellists highlighted the need to simplify insurance products, improve claims experiences, and bridge the trust gap between insurers, hospitals, and policyholders.

Beyond GST relief

Roy said the average age of retail health insurance consumers had fallen from around 43 a decade ago to 37 in the latest assessment, indicating that younger consumers were entering the market. However, he cautioned against attributing this shift solely to GST rationalisation, as rising awareness, the impact of Covid-19, and new product features could also have contributed.

He also questioned whether affordability was the primary barrier to wider adoption, pointing to the growing popularity of online shopping in smaller cities.

Srinivasan said the removal of 18 per cent GST made premiums appear more economical and encouraged some customers to purchase or upgrade policies. However, he said the impact had stabilised after the initial months.

“GST removal has certainly helped, but that alone is not enough for us to sell health insurance policies,” he said.

He added that a significant coverage gap persisted despite growing insurance awareness. While some people remained uninsured, many others had inadequate coverage. A policy worth ₹5 lakh, for instance, could be exhausted after a short hospital stay, leaving policyholders vulnerable to further medical expenses.

The cost of healthcare

Srinivasan said high medical costs were pressuring both households and insurers, making it difficult for people to afford quality treatment without insurance.

He argued that reducing healthcare costs was essential to making premiums more affordable, rather than relying on repeated premium increases. He also called for stronger coordination between hospitals and insurers to improve cashless authorisations, claims settlements, and discharge processes.

Prakash said affordability could not be viewed in isolation from the customer experience. Consumers were willing to pay for insurance when they could expect reliable services and seamless claims, he said.

He identified a trust deficit among policyholders, insurers, hospitals, and grievance redressal bodies as a major obstacle to retail health insurance growth.

Simplifying policies, rebuilding trust

Prakash said customers often purchased policies without fully understanding exclusions and coverage limits, leading to disputes when claims arose. He called for clearer communication in accessible formats instead of relying on complex legal language.

“If you look at the perspective of the consumer, the biggest thing I would like to understand on day one is what I am covered for and what I am not covered for,” he said.

Roy also stressed the need for sustained awareness-building, including introducing health insurance as a subject in academia. He said younger people needed to understand the importance of insurance as lifestyle-related diseases increasingly affected them.

Bridging the trust gap

Prakash said the General Insurance Council was working towards a dispute resolution forum to address disagreements between hospitals and insurers, including disputes over payments, empanelment, delays, and clinical decisions. He also outlined plans for a medical specialist group to bring clinical expertise into insurance decision-making.

He said industry-led reforms could help address immediate problems, with the need for a dedicated health regulator assessed as these initiatives evolved.

Roy, however, supported the idea of a health regulator, citing concerns about profitability pressures in healthcare and the need for stronger institutional oversight.

The panellists agreed that GST relief was an important step, but wider insurance coverage would depend on affordable healthcare, transparent policies, better claims experiences, and greater public awareness.