Narayana Health’s Aditi Insurance looks to bridge the Coverage Gap for Working Class
By Arunima Rajan
What does ₹10,000 a year get you in healthcare? ₹1 crore coverage for surgeries-but there’s more to the story.
Narayana Health, brain child of Dr. Devi Prasad Shetty, has stepped into the insurance space. It has done this by launching Narayana Health Insurance Ltd (NHIL). In July, this year, it introduced Aditi, its first insurance product.
Aditi is designed exclusively for treatments within its own network of 21 hospitals and numerous clinics across India.
In Bengaluru, the healthcare chain operates seven hospitals and three clinics. By tying the policy to its facilities, Narayana Health is testing a relatively uncharted model in India: integrating healthcare delivery with insurance. This is with a view to streamline patient care and costs.
At an annual premium of ₹10,000, Aditi promises a sum assured of ₹1 crore for surgeries and ₹5 lakh for medical management. In doing this, the scheme is positioning itself as a cost-efficient alternative for individuals seeking high-value healthcare coverage. The product is not just a health policy; it’s a strategic move to integrate healthcare delivery and financing, under a single umbrella. This is a model which is relatively uncommon in India.
According to its 24rth Annual General Meeting report, Narayana Health Insurance has secured its IRDA licence in a record time of six months. The new offering for the ‘missing middle class’ is now available in its facilities across Mysore and its four neighbouring districts.
This approach aims to eliminate the inefficiencies which get created owing to the fragmented relationship between insurers and hospitals. These issues are manifold and include delays in claims processing; misaligned priorities; a lot of back and forth. All this compounds a patient’ distress.
And that too on top of the existing affliction!
Instead, by consolidating the roles of provider and insurer, Narayana Health is betting on streamlined care pathways and cost optimization.
Dr. Feroz Ikbal, Associate Professor at Tata Institute of Social Sciences (TISS), over this interview, weighs in on the implications of Aditi in India's healthcare and insurance infrastructure.
At the outset, he emphasises how such integrated models: by rethinking affordability, accessibility, and operational efficiency have the potential to recalibrate the healthcare ecosystem.
During the product’s launch on July 1 this year, Narayana Health clarified that the headline-grabbing “₹1 crore coverage” applies exclusively to surgeries. For medical management, the cap is set at ₹5 lakh, which is somewhat in alignment with the coverage offered under the Government’s Ayushman Bharat scheme.
The policy also includes a daily deductible of ₹2,000 on all admissible claims for non-surgical treatments, underscoring the fine print which potential buyers will need to weigh carefully.
For instance, if you're admitted in a hospital for a non-surgical procedure, say, for a period of 3 days, and your coverage amount is Rs 1 lakh.
And your total treatment cost is Rs 20,000, for over 3 days: You will be able to claim only Rs 14,000 in this case.
Here, owing to this caveat, the insurer will charge you Rs 2000, per day. Effectively, Rs 6000 over the 3-day stint.
Whether Aditi will succeed in transforming India’s healthcare landscape will depend on its ability to scale. This, without compromising on quality or inclusivity. But the move signals a shift in how health systems could be organised, in doing this, it will potentially be setting a precedent for other providers to follow.
How do you think Narayana Health’s standalone insurance model, Aditi, could influence the broader hospital-insurance dynamic which currently exists in India?
At a time when umpteen number of health insurance products are making an entry into the Indian healthcare sector, the Aditi (scheme) is quite interesting. The last few years have seen increased premiums for individual; family floaters (the kinds that cover your entire family under a single plan); and group insurance.
At first glance, this policy appears to be very unique. Its key feature is the very affordable premium which leads to offering substantially large coverage. But this is restricted to one group of hospitals: the Narayana Health hospitals (NH) chain. Also, here, care will be offered only in the general ward, which is below the middle-class’ (whom this policy is looking to target) expectation when they get hospitalised.
What are the potential risks and benefits for hospitals that might consider adopting similar integrated models?
Managing a hospital and managing health insurance are two different businesses. There is already a long enduring trust deficit in society with respect to hospitals. Now, if the same provider becomes the payer, the moral hazards of health insurance can come up.
For context, a moral hazard is a situation where an economic actor has an incentive to increase its exposure to risk because it does not bear the full costs of that risk. For example, when a corporation is insured, it may take on higher risk knowing that its insurance will pay the associated costs.
To my understanding a conflict of interest can also arise when you are running both the businesses.
In your opinion, what challenges might Narayana Health face in scaling the Aditi model across different regions of India?
It depends on how NH is planning to scale its operations into tier two cities and other major cities where it has a scant presence as of now. We have already seen how the private sector was reluctant in its response to the government’s Ayushman Bharat insurance scheme.
The success of any such scheme, including Aditi, depends on empanelling smaller hospitals into this scheme. The premium price is attractive for patients. But I don't know how attractive the package price is for hospitals.
Do you think integrated insurance models, such as Aditi, could lead to more streamlined hospital operations, and if so, how?
I don't think this approach will make any significant impact in the operations. NH will not only have to deal with patients covered under Aditi but also those patients enrolled in other schemes. The complexity of the hospital operations will remain more or less the same.
What regulatory challenges should hospitals anticipate when entering the insurance space, and how can they navigate these, according to you?
Currently getting a licence from the IRADAI, the Insurance Regulatory and Development Authority of India, is the only thing in the regulatory space that is a barrier to entry, per say. We don’t know how things will go, because of conflicts of interest the IRDAI may restrict or bar hospital groups from entering into the health insurance space.
How might this shift impact hospitals’ relationships with third-party insurers, and what role should CXOs, the chief experience officer, play in managing these transitions?
The Indian health insurance space is still at the nascent stage. There is no single Indian hospital group which can be regarded as truly pan Indian. So even if hospital groups start their own health insurance, they still need to cater to people empanelled with other health insurance providers.
Could this model exacerbate disparities in healthcare access, especially for patients outside the hospital’s insurance ecosystem?
This model will not have any significant impact on improving the access to people who are outside the health insurance ecosystem. Large number of patients need outpatient services, diagnostics and supply of medicines which are not covered under health insurance. Since NH has a significant presence in cities, such as Bangalore, the NCR region and Kolkata, this model may help the bottom of the pyramid health insurance market.
How can hospital leaders ensure that such models prioritise patient welfare while remaining financially sustainable?
We need to look into the claims ratio of this innovative health insurance policy, for at least over the next three years, to see the financial sustainability. Health insurance will try to see that optimum care is given so that the hospital bills are well within the limit. Hospitals will have to ensure that patient care is not compromised, and its bottom line is not affected.
What long-term impact could this trend have on India’s healthcare landscape, and how should CXOs prepare their institutions to adapt?
Here, patient outcomes and reducing the cost will become the mantra of CXOs. So, these models may bring in the concept of “value-based care” in the Indian context.