An Actuarial Perspective on the Discrepancies in Health Insurance Pricing: Evidence from India

This study investigates the actuarial fairness of pricing health insurance policies by examining discrepancies within the Indian health insurance and their impact on medical costs. Health insurance helps an individual in financing their medical expenses, for a fee called premium which is typically the reflection of expected cost of medical services. However, discrepancies such as misinformation, accessibility to health care services, hospital quality and Inconsistencies in claims processing, increase costs associated with health care of individuals participating in the health insurance, thereby challenging the fairness of these policies. Structural Equation Modelling (SEM) has been employed to develop latent variables representing these discrepancies and Hierarchical Linear Modelling (HLM) has been used to assess their effect on the cost of medical care. The findings of this study suggest the presence of discrepancies in the Indian health insurance sector and the results support the significant impact on the increase in medical expenses. The study concludes with policy recommendations aimed at enhancing the efficiency, effectiveness and fairness of the health insurance policies in India