Mandatory group health insurance schemes must be started by companies for their employees for better health insurance cover in India, said Planning Commission’s deputy chairman Montek Singh Ahluwalia here on Thursday.

“If in the organised sector, everyone is made to sign up for health insurance with the job contract then it can improve the health insurance coverage in India. Companies should make policies and make sure people in their organisation opt for it,” said Ahluwalia. He was speaking at the Confederation of Indian Industries’ 4th International Health Insurance Summit 2010. 

Citing examples of the health benefits given by the government to the central and state government employees, Ahluwalia said that the group health insurance cover offered by private companies should not lapse with the individual employee’s change in company.

“Government sector employees move from one sector to the other and they do not lose their health insurance cover. In the private sector, if a person loses his insurance cover if he moves from one company to the other, then this would be a humungous problem,” he added.

Commenting on the point made by Ahluwalia, Insurance Regulatory Development  Authority’s chairman  J Hari Narayan said that portability of the health insurance policy is necessary, but if it will strengthen the health insurance industry, would have to be seen.

On spending in the health sector in India, Ahluwalia pointed out that the out-of-pocket expenditure here is high and a very small portion of the total health expenditure is spent by the government.

“Both the central and the state governments together spend less than one percent of the GDP on health,” he said, “If we expand our health expenditure from 1 percent to say, three percent, not all of it has to be spent on building public sector hospitals and on human resource. A part of it could be contributed to the government health insurance schemes like the national health insurance scheme for households below the poverty (or the RSBY), but unfortunately, there aren’t many such government schemes available in India for health insurance.”

Out of the total 6 percent health expenditure in India, 1 percent is spent by the government, 5 percent is spent by the private sector. Out of the 5 percent shelled out by the private sector, 2.3 percent is covered by the insurance companies and the rest is out-of-pocket, informed Hari Narayan.

Ahluwalia added that instead of looking at the developed countries, India should learn from the G20 countries how they are managing their organised sector.

Shifting the discussion on the ongoing cashless facility crisis which hospitals and publich sector insurance companies are dealing with, CII’s National Committee on Health Insurance’s chairman Analjit Singh said, “One or two people handling a major chunk of the industry cannot beat the rest of the players in the industry and they cannot stop the cashless facility in a day. They do not have the authority to do so. We urge the government to have an honest dialogue going on so that this matter can be resolved in a just manner.”

CII National Committee on Healthcare chairman Dr Naresh Trehan, who is also heading one of the leading private hospitals in the country which was involved in the cashless controversy, said, “In this country we let the conflict burn and then we take action on it. We want this fire to be burned out immediately because it is the people who are suffering in this. Individuals do not have any power here. We must have a mechanism where some justice is given to the consumers. If an individual has paid for treatment at a top class hospital, why should he go to a second-rate hospital?”

Meanwhile, Hari Narayan said that he is confident whatever issues there might be with the health insurance sector, would be resolved for the benefit of all stakeholders.