India's Healthcare Challenges And Urgent Need For Comprehensive Health Policy And Insurance Reforms

In contrast, countries like Canada, Australia, and New Zealand offer robust national healthcare systems that assure free state-provided healthcare, making extensive private insurance largely redundant. India's model — a combination of underfunded public healthcare and expensive private care — urgently needs reform.

Current State of Healthcare in India

• Inadequate Public Infrastructure: Overcrowded government hospitals, shortage of beds, and obsolete equipment.
• Human Resource Gap: Chronic shortages of doctors, nurses, and support staff, especially in rural India.
• Low Public Health Expenditure: Healthcare spending lingers around 1.2%-1.5% of GDP, well below international benchmarks.
• Rise of Private Healthcare: Escalating costs drive citizens to rely on private insurance, yet many find themselves underinsured or uninsured.

The Medical Insurance Crisis

• Tax-Saving Focus: Medical insurance is often purchased to avail Section 80D deductions, rather than as a genuine risk management tool.
• Opaque Policy Terms: Hidden exclusions, long waiting periods, and burdensome conditions deny rightful claims.
• Denial of Claims: Frivolous defences citing alleged non-disclosure or minor breaches deny fair compensation.
• Litigation Burden: Insured persons are forced into litigation due to wrongful denials, burdening consumer courts.

Judicial Standards for Insurer Bad Faith: U.S. Jurisprudence

1. Florida Supreme Court: Harvey v. GEICO (2019)

In Harvey v. GEICO, the Florida Supreme Court found that insurers owe a fiduciary duty to their insureds to act in good faith when handling claims.

• Facts: GEICO failed to settle a claim within policy limits when it had a clear opportunity, leading to an excess judgment against the insured.
• Holding: The insurer's failure to settle in good faith justified uncapping the insurer's liability beyond policy limits.
• Principle: An insurer's unreasonable failure to settle exposes it to full liability for any excess verdicts, thereby “uncapping” policy limits.

2. Texas Supreme Court: USAA Texas Lloyds Co. v. Menchaca (2020)

In Menchaca, the Texas Supreme Court clarified the link between contractual obligations and extra-contractual remedies:

• Key Holding: An insured can recover damages caused by an insurer's statutory violations (like unfair settlement practices) even when the insured has no right to benefits under the policy itself.
• Bad Faith Liability: Insurers are liable if they mishandle claims, misrepresent policy terms, or fail to promptly offer reasonable settlements.
• Impact: The judgment empowers courts to award compensatory and sometimes exemplary damages for bad faith.

These judgments illustrate that courts impose serious financial consequences on insurers that prioritize their own interests over the insured's welfare. Such precedents create powerful disincentives for unfair practices and restore balance in insurance relationships.

Pradhan Mantri Bhima Yojanas: Achievements and Limitations

India has introduced low-cost insurance schemes like:

• Pradhan Mantri Suraksha Bima Yojana (PMSBY): ₹2 lakh accidental coverage at ₹20 premium.
• Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY): ₹2 lakh life coverage at ₹436 premium.

Achievements:

• Huge enrolment across semi-urban and rural populations.
• Financial inclusion through linkage with Jan Dhan Yojana bank accounts.

Limitations:

• Inadequate coverage amounts compared to real medical and life risks.
• Lack of general healthcare coverage (hospitalization, surgeries, etc.).
• Low awareness and under-utilization among target groups.

Suggestions for Expansion:

• Raise the coverage ceiling to ₹5-10 lakh.
• Include hospitalization and critical illness coverage.
• Subsidize premiums for marginalized groups.
• Introduce telemedicine and preventive healthcare services as add-ons.

The Litigation Propensity of Indian Insurers

A significant chunk of cases before Consumer Dispute Redressal Forums involve insurance disputes, particularly:

• Claim Denials: Technical denials based on non-disclosure of immaterial facts.
• Delay Tactics: Seeking endless clarifications to delay settlement.
• Frivolous Defences: Contesting obviously genuine claims.
• Appeal Culture: Insurers often prefer to appeal consumer awards rather than pay immediately.

This litigation-first attitude imposes tremendous emotional and financial hardship on already distressed insured individuals. Indian jurisprudence (e.g., United India Insurance Co. Ltd. v. Manubhai Gajera, NCDRC) has criticized such practices but the need for statutory penalties akin to the Harvey and Menchaca models remains strong.

Learning from Obamacare: Salient Features for India

The U.S. Affordable Care Act (ACA, or Obamacare) introduced key reforms:

• Guaranteed Issue: Insurers must offer coverage regardless of pre-existing conditions.
• Minimum Essential Benefits: Maternity care, mental health, hospitalization, and preventive services must be covered.
• Subsidized Premiums: Federal subsidies make insurance affordable for low- and middle-income citizens.
• Insurance Exchanges: Transparent marketplaces for comparing and buying policies.
• Ban on Lifetime Limits: Essential health benefits must be covered without arbitrary monetary caps.

India's Application:

• Mandatory coverage for pre-existing conditions.
• Regulated “Health Insurance Marketplaces” run by IRDAI.
• Subsidized insurance for vulnerable populations.
• Standard essential benefits included across all policies.
• Strict timelines and penalties for claim settlements.

Conclusion

Healthcare cannot be left to market forces alone in a developing society like India. A twin strategy of universal healthcare provisioning and robust insurance regulation is imperative. Drawing lessons from U.S. cases like Harvey and Menchaca, India must introduce punitive consequences for bad-faith insurer conduct, including uncapping policy limits for failure to settle reasonably. Additionally, adapting Obamacare's core reforms, expanding national insurance programs, and enforcing consumer-friendly judicial standards can together create a health ecosystem where no Indian must fear financial ruin for seeking medical care. Healthcare reform is not just a matter of policy — it is a matter of human dignity.

Views Are Personal.

Author is a Former Judge of High Court of Punjab And Haryana.

The above is an excerpt taken from the book 'Medicine And Law' written by him and published by Thomson Reuters.

The book is Available in https://amzn.in/d/02RUSmj;

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