Comparative study of Insurance law US and India with Special Reference to MEDICARE, MEDICAID and CHAMPUS
“Insurance is a method of spreading over a large number of persons a possible financial loss too serious to be conveniently borne by an individual.”
Any program which pays for medical expenses whether occurring because of accident or any other mishappening is known as insurance.
- S. Insurance Law
There are various insurance plans for various categories of people, it can be privately purchased insurance, social insurance which pools resources and spreads the financial risk associated with major medical expenses across the entire population to protect everyone, or a social welfare program funded by the government such as Medicaid which provides assistance to people who cannot afford health coverage.
We are going to study the U.S Insurance law with special reference to Medicare, Medicaid and Champus as these are the major insurance plans in U.S.
Medicare is a federal social insurance program that provides health insurance to people over the age of 65, individuals who become totally and permanently disabled, End Stage Renal Disease (ESRD) patients, and people with ALS. Recent research has found that the health trends of previously uninsured adults, especially those with chronic health problems, improve once they enter the Medicare program. Traditional Medicare requires considerable cost-sharing, but ninety percent of Medicare enrollees have some kind of supplemental insurance – either employer-sponsored or retiree coverage. With supplemental insurance, Medicare ensures that its enrollees have predictable, affordable health care costs regardless of unforeseen illness or injury.
As the population covered by Medicare grows, its costs are projected to rise from slightly over 3 percent of GDP to over 6 percent, contributing substantially to the federal budget deficit. In 2011, Medicare was the primary payer for an estimated 15.3 million inpatient stays, representing 47.2 percent ($182.7 billion) of total aggregate inpatient hospital costs in the United States. The Affordable Care Act took some steps to reduce Medicare spending, and various other proposals are circulating to reduce it further.
The population which was below poverty line was given the benefit of Medicaid, started in 1965. Since enrollees must pass a means test, Medicaid is a social welfare or social protection program rather than a social insurance program. Despite its establishment, the percentage of US residents who lack any form of health insurance has increased since 1994. It has been reported that the number of physicians accepting Medicaid has decreased in recent years due to lower reimbursement rates.
The Affordable Care Act dramatically expanded Medicaid. The program will now cover everyone with incomes under 133% of the federal poverty level who does not qualify for Medicare, provided this expansion of coverage has been accepted by the state where the person resides. Meanwhile, Medicaid benefits must be the same as the essential benefit in the newly created state exchanges. The federal government will fully fund the expansion of Medicaid initially, with some of the financial responsibility gradually devolving back to the states by 2020.
In 2011, there were 7.6 million hospital stays billed to Medicaid, representing 15.6% (approximately $60.2 billion) of total aggregate inpatient hospital costs in the United States.
TRICARE, formerly known as the Civilian Health and Medical program of the Uniform Services (CHAMPUS) is a health care program of the United States Department of Defense Military Health System. Tricare provides civilian health benefits for U.S Armed Forces military personnel, military retirees, and their dependents, including some members of the Reserve Component. The Tricare program was managed by Tricare Management Activity (TMA) under the authority of the Assistant Secretary of Defense (Health Affairs). Tricare is the civilian care component of the Military Health System, although historically it also included health care delivered in the military medical treatment facilities.
In the late 1980s, because of escalating costs, paperwork demands, and general beneficiary dissatisfaction, DOD initiated a series of demonstration projects. Under a program known as the CHAMPUS Reform Initiative (CRI), a contractor provided both health care and administrative-related services, including claims processing. The CRI project was one of the first to introduce managed care features to the CHAMPUS program. Beneficiaries under CRI were offered three choices – a health maintenance organization-like option called Tricare (CHAMPUS) Prime that required enrollment and offered enhanced benefits and low-cost shares, a preferred provider organization-like option called Tricare (CHAMPUS) Extra that required use of network providers in exchange for lower cost shares, and the standard CHAMPUS option that continued the freedom of choice in selecting providers but required higher cost shares and deductibles known as Tricare Standard.
Insurance laws in India
The insurance sector in India is not as pervasive as the insurance sectors of developed countries abroad and the pool of policyholders is much larger in developed countries than in India. Launched in 1986, the health insurance industry in India has grown significantly mainly due to liberalization of economy and general awareness. According to the World Bank, by 2010, more than 25% of India’s population had access to some form of health insurance. There are standalone health insurers along with government sponsored health insurance providers. Until recently, to improve the awareness and reduce the procrastination for buying health insurance, the General Insurance Corporation of India and the Insurance Regulatory and Development Authority had launched an awareness campaign for all segments of the population.
The principal legislation regulating the insurance business in India is the Insurance Act of 1938. Some other existing legislations in the field are – the Life Insurance 15 Corporation (LIC) Act, 1956, the Marine Insurance Act, 1963, the General Insurance Business (GIB) (Nationalization) Act, 1972 and the Insurance Regulatory and Development Authority (IRDA) Act, 1999. The provisions of the Indian Contract Act, 1872 are applicable to the contracts of insurance, whether for life or non-life. Similarly, the provisions of the Companies Act, 1956 are applicable to the companies carrying on insurance business. The subordinate legislation includes Insurance Rules, 1939 and the Ombudsman Rules, 1998 framed by the Central Government under Sec.114 of the principal Act as also 32 regulations made by the IRDA under Sec.114 A of the principal Act and Sec.26 of the IRDA Act 1999.
In India, the RSBY (Rashtriya Swasthya Bima Yojana) plan complements the Medicaid program in U.S. It is a government-run health insurance scheme for the Indian poor. It provides for cashless insurance for hospitalisation in public as well as private hospitals. As opposed to many previous social programs, the RSBY does not involve reams of forms that can pose huge hurdles to people who can neither read nor write. All data is stored digitally on a smart card, which represents a huge logistical IT operation.
Insurance companies are tasked with ensuring that people know about the program and are able to get hold of a smart card, which can cover up to five people. They then receive a premium from the state as well as up to 30,000 rupees a year for hospital treatment per family. They have to pay only Rs. 30/- as registration fee as Union and State Governments pay the insurance charges to the insurer selected by the State Government on the basis of a competitive auction.
Almost all of India’s 28 states have chosen to take part in the scheme voluntarily, and some 130 million Indians are now insured via RSBY.
So, as compared to U.S. Insurance laws which provides for Medicare plan for people above 65 years of age and Medicaid plan for very poor population, there no such Medicare plan or any other complementary plan for senior citizens while the RSBY plan complements the Medicaid plan of U.S. Neither there is any plan for the defense services personnel, while in U.S. TRICARE plan aims to provide insurance facilities to Military serving personnel. Better data availability and finer underwriting practices in these developed countries lead to lower premium rates as compared to premium rates in India. While the Indian insurance sector has evolved to a great extent, it is an undeniable fact that it still has a long way to go. The private insurance companies in India, for example, are much newer as compared to insurance companies in the West and are therefore, not as experienced in the insurance sector as their counterparts in the USA and the UK. Insurance experts in the industry claim, however, that the Indian insurance sector is on the path to improvement and we will see a positive change in the underwriting practices in about four to five years.
 Law of Insurance by Dr. Avatar Singh
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