Daybreak - How the govt gave the elderly free health cover, and insurers a reality check

Episode Date: February 24, 2025

In October 2024, the government of India launched the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, a health insurance coverage for all senior citizens aged 70 and over, regardless of income. This is big news for healthcare in India because for the longest time, this is exactly the age group that has pvt insurance companies have been ignoring.To give you a clearer picture, a person aged over 60 years pays anything between Rs 30,000–50,000  as annual premium for coverage as low as 5 lakh rupees. Even policies for Rs 6–10 lakh are harder to find and cost Rs 40,000–70,000 annually. That’s about 5X the premium someone younger would pay for the same coverage. And it’s not just the high premiums; these policies are of little help to seniors when they need it the most. In fact,  more than four out of every five people aged above 60 aren’t covered by any insurance at all. Only 20% of those over 45 years have a health cover. And the rest are just out there vulnerable to emergencies. The reason being: high premiums and meagre coverage.Tune in.**This episode was first published in November 2024Daybreak is now on WhatsApp at [phone]. Text us and tell us what you thought of the episode!Daybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.The Ken is hosting its first live subscriber event! Join two long-term and contrarian CEOs, Nithin Kamath of Zerodha and Deepak Shenoy of Capitalmind, as they discuss the mental models, decision making frameworks, and potential outcomes related to a very real possibility: an extended stock market winter that lasts 24 months or more. Click here to buy your tickets. 

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We will also add it to the show notes of this episode. Thank you. And now on to the episode. In October, the government of India launched the Ayushman-Bharat Pridhan-Mandri Jan Arrogya Yojana. This is a health insurance coverage for all senior citizens aged 70 years and over, regardless of income. In its press release, the government said that now every senior citizen above the age of 70 will receive free treatments in hospitals, these senior citizens will be issued the Ayushman via Vandana card. If an elderly person in the household has this card, family expenses will be reduced and the government said their worries will also diminish.

Now, for the longest time, this is exactly the age group that private insurance companies have been ignoring. To give you clear a picture, a person aged over 60 years pays anything between 30 to 50,000 as an annual premium for coverage as low as 5 lakh rupees. Even policies for 6 to 10 lakh rupees are harder to find and cost about 40 to 70,000 annually. And it is about five times the premium someone younger would pay for the same coverage. And it's not just the high premiums. These policies are also of little to no help to seniors when they need it the most.

Take the case of 83-year-old Bisham Malka. who is a retired sales professional. He's had two cataract surgeries so far and his policies covered barely one-fifth of the total expenses that came to around 1.5 lakh rupees. There are many like him who have no choice but to keep switching between private and government policies for decades. Because most state and central schemes are mostly for people below the poverty line or for government employees. So India's missing middle, which are people who can neither afford high premiums, nor qualify for state coverage, are left in a limbo. In fact, more than four out of every five people aged above 60 years are not covered by

any insurance at all. And only 20% of those who are over the age of 45 have a health cover at all. And the rest? They're just out there vulnerable to emergencies. And the reason is high premium and meagre coverage. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Das Sharma, and I don't chase the new cycle. Instead, every day of the week, my colleague Rahil and I will come to you with one business story that is worth understanding and worth your time.

If you think about it, it's quite simple. The way health insurance businesses make money is by collecting premiums from customers when they are young and healthy. But things get tricky for them the moment their customers become older, and there is a possibility that they may actually make a claim. Yashiz Sampat, an independent insurance professional with over 24 years of experience, spoke to my colleague the Ken reporter Sudeshna Rae, and he actually said it with no sugar coating. He said paying for senior citizens is a loss-making product for insurance companies.

Sampat described insurers looking at customers below the age of 45 as the green category, those between 45 and 60 as the yellow category and those above 65 as the red category. But here is where it gets, what shall I say, a little unfair. Because even having a health insurance policy in place when you're in the green category or when you're younger does not really ensure that you're covered later. For example, Malkani stuck to the cover that he had from financial services joint Citibank for 16 years, but he couldn't use it properly for issues like diabetes and hypertension. Premiums kept going up and eventually he could not keep up with the policy.

A Delhi-based claims executive at a private insurer Star Health Insurance explained why that might be to the can. He said three years ago, people carried fixed premium charts in the market to sell health insurance door to door. Now, companies fixed premiums in their filings with the regulator, but they do not disclose it to the buyer, which is what makes this whole thing so messed up. Get this. So when a premium jump happens, it takes your age, conditions, previous claims, everything into consideration. Every person will have a customized premium computed and they

won't even know how much it is until they reach the next age bracket. Basically, there is no limits to premiums now. It is no wonder then that most senior citizens pay from their pockets when a health issue rises. Because like Harsh Kumar Singh, the CEO at Imoha, which is an elder care services company, told us it just does not make sense to buy a policy when you have a health condition at that age. Nearly half of the seniors who are with Imoha do not have a health cover. And of the remaining, most of them rely on add-on policies which are less. to their children's corporate health insurance. And this is why the government's new scheme is starting to look like a real silver lining for people.

More on that in the next segment. A field investigator with the government's health insurance scheme for the elderly told the Ken that half of the patient registrations with the public health insurance scheme translate into claims. So now, with the scheme open to everybody above the age of 70, on either side of the poverty, line, the missing middle of senior citizens in India can finally find a way in. The field investigator also gave us an example. He told us about one individual who has a private insurance cover of 7 lakh rupees against a premium of 54,000 per year.

But he is 67. Now though, with the government scheme, he could get a 5 lakh rupee cover at no cost. As it turns out, there are more takers for state-sponsored health schemes too. A Star Health Executive told us that many are not renewing their private policies because, for example, the Rajasthan government-sponsored health scheme gives a 25-lack cover per family. Premiums are priced at about $850 and it is waived off for those who are below the poverty line. The executive also claimed that other state schemes in Gujarat and Kerala have to be able to. seen similar success. Now, let us take medicines, for instance. They are what cost the most

for elderly people. No insurance policies cover medicine bills that could go up to 10 to 20,000 rupees per month. It is here that the government's Jan Ashidi-yodhya shifted the needle. It made medicines cheaper, even 80 to 90 percent in some cases. While some aspects of this plan come with a pinch of salt, its success in application suggests that the the government's health insurance initiatives could fill the gap left by private players. So, what are these private players doing exactly? As Imoha Singh puts it, the length of care is equal to the cost of care. Yet, this essential concept seems to be missing from most senior health plans. Even though some policies claim to cover home care, it is often limited to just 10 to 15 days.

But, as we all know, home care can last for weeks or even months. So covering only a few days is practically of no use. Thankfully, though, many private insurers are partnering with elder care startups to make senior health insurance viable for both parties. Take IMOHA, for example, which has partnered with Aditya Birla Sun Life Insurance to offer small ticket insurance plan for its employee's senior parents. Pankajarora, the growth head at Imohar, told us that they're also in talks with insurers to bundle these retail products. Ashish Gupta, who's the founder of Samirth, another elder care organization, is also working to introduce an independent charyiatric assessment clinic.

He thinks it is a vital layer of health care in his experience with Samarth elder care. Imoha's founder, Somi Jitre, explained it to us quite well. He said these models can be a win-win for both seniors and insurers. Because by spreading the risk, say with a dozen people on a policy and only two making claims, the financial impact is lessened for the insurer. So now, with this move to first urge private insurers to include people above the age of 65 years in health covers and now opening the government scheme to those in all-income groups, the government seems to be taking multiple steps to ensure that this ignored segment has something to fall back on.

These shifts could change the insurance structure for over 60 million seniors, but only if the government solves its current shortcomings, which are delays in hospital reimbursements and patient registrations. Maybe it would be a good idea to replicate some successful state models. But what has happened with private insurance in India is not just a product problem. It is a structural one. Like Sudejana rightly says, insurance isn't always profitable for every group. But some products need to exist for society to function properly.

And senior health coverage is one of them. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of our subscriber-only offerings. A full subscription unlocks daily long-form feature stories, newsletters and podcast extras. To subscribe, head to the ken.com and click on the red subscribe button on top of the Ken website. Today's episode was hosted by Snikha Sharma and edited by Rajiv Sey.