Why mental health insurance in India is in itself anxiety-inducing

The insurance secor’s regulatory body, the Insurance Regulatory and Development Authority of India (IRDAI), has mandated that all health insurance policies must cover mental illness from October 1, 2022. However, the benefits of this directive are yet to percolate down to the policy holder.

There are multiple challenges, including a marked lack of awareness among policy holders, because of which mental health insurance has not taken off in India, say experts. And this despite the fact that the number of people suffering from mental health issues (WHO reported that 1 in every 3 Indian suffers from depression) is only growing in India.

IRDAI committee

After the lukewarm response to its instruction to insurance companies, IRDAI formed a five-member committee comprising medical professionals and insurers this May, with the aim to ‘provide advice and insights on mental health coverage and ensure comprehensive protection for policyholders’.

Also read: India’s health insurance sector is booming, and it’s not just due to pandemic

Back in 2018 itself, the Mental Healthcare Act, 2017 had been enacted stating that ‘every insurer shall make provision for medical insurance for treatment of mental illness on the same basis as is available for treatment of physical illness’.

But this has not caught on yet, be it from the insurer end or the insuree end. So much so that a public interest litigation (PIL) was filed in the Supreme Court saying the companies are violating the provisions of the Act. The growth of mental health insurance in India has followed what can best be described as a staggered trajectory, with scant progress till the onset of COVID-19.

Increase in mental disorders post-COVID

The pandemic was a wake-up call for both the layman and the health insurance industry, not just in India, but the world over. As per a WHO report, among its many impacts, COVID-19 created a global crisis for mental health, fuelling short and long-term stresses and undermining the mental health of millions.

As per the WHO estimates, post-COVID, there has been a 25 per cent increase in the prevalence of mental disorders. In India, 10.6 per cent of adults require immediate treatment and intervention, as per NIMHANS. “It is time to put the stigma related to mental health behind us, and tackle it just as any other medical condition,” says Yateesh Shrivastava, an industry professional.

The growth in cases of mental health issues during the pandemic spurred IRDAI to mandate that all health insurance policies should cover mental illness from October 1, 2022. “All insurance products shall cover mental illness and comply with the provisions of the MHC Act, 2017, without any deviation,” it said.

However, this order was followed by only a few insurers, prompting the regulator to issue another order in March this year, followed by the inception of the committee in May.

Major challenges

Firstly, on a micro level, the stigma that accompanies mental health issues is a major deterrent for customers to consider purchasing these policies as well.

Speaking to The Federal, an insurance provider in Mumbai, says: “One issue for customers suffering from mental ailments is that they hesitate to submit psychiatrists’ or counsellors’ bills to claim the insured sum, owing to the accompanying stigma. This results in them paying heavy out-of-pocket expenses.”

For depression – one of the most common mental disorders – the treatment largely includes high-cost medication, and weekly therapy/counselling sessions. The cost of each session ranges from ₹1,500 to ₹2,000 per hour, and the average cost of monthly medication ranges between ₹1,000 and ₹1,500.

In addition to this, policies covering mental health have inadequate services and funding. Around half the world’s population lives in countries where there is just one psychiatrist to serve 2 lakh people or more. On an average, countries dedicate less than 2 per cent of their healthcare budgets to mental health, as per the report. This greatly affects the quality of services offered to policyholders.

Also read: Indian health insurance market expands amid rising premiums

At present, there are no stand-alone mental health policies in India. Health insurance companies offer cover for a variety of mental disorders, such as post-traumatic stress disorder (PTSD), bipolar disorder, depression, schizophrenia, and anxiety, among others. Dementia, anxiety disorders, obsessive-compulsive disorders, psychotic disorder etc. are also covered unless some specific exclusions are mentioned in the policy.

Insurers offering mental health insurance in India may need to rework their math. For instance, right now, there is no option for existing customers to purchase a top up for mental health.

In the insurance industry, companies usually have a fixed premium loading for previous medical conditions, which can pose a problem in the case of mental health insurance. Also, in some cases, there can be more than one diagnosis. Some illnesses – such as recurrent depression, bipolar disorder, and schizophrenia – require lifelong treatment involving steep costs.

Reading the fine print

For customers looking for mental health cover in their health policies, it is essential to read the fine print, as the coverage varies from one plan to another. When choosing a health insurance policy, it’s important to carefully examine the coverage offered, especially regarding mental health conditions and treatments. The same rule applies to conditions that are excluded, such as those triggered by substance abuse.

Secondly, policy holders must know that many mental health insurance policies in India have a waiting period before they become effective. Most claims can only be made after a two-year waiting period. To be noted is the fact that insurance companies cannot reject new policy applications by people with mental illness, and claims will also be admissible if policyholders develop mental illness after purchasing the policies.

Most mental health treatments involve expensive therapy and counselling sessions by experts. Since these ailments mostly require treatment in OPDs (outpatient departments), customers should ensure that the health insurance product covers the OPD component.

“Customers must look for OPD coverage in their health plans, as hospitalisation is largely not required in mental health conditions, and consultation charges and medication form a bulk of the costs. Caps on treatment in the OPD can also be a deterrent, as this is a major component of the costs,” says Shrivastava.

If the customer has purchased an OPD cover, then the costs towards doctor consultations, diagnostic tests, etc, shall also be provided by the insurer.