The World Health Organization (WHO) defines ‘Health’ as a union of physical, spiritual, mental, and social dimensions. WHO’s paramount vision is “mental health and well-being are fundamental to quality of life, enabling people to experience life as meaningful, become creative and active citizens.”
India is a signatory of the United Nations Convention on the Rights of People with Disabilities (‘Convention’), that forbade discrimination against people with mental disorders or other disabilities. The Convention not only recognises the importance of non – discrimination in the context of disabilities, but also explicitly mentions medical insurance under Article 25, extracted as under.
“Article 25: Health States Parties recognize that persons with disabilities have the right to the enjoyment of the highest attainable standard of health without discrimination on the basis of disability. States Parties shall take all appropriate measures to ensure access for persons with disabilities to health services that are gender sensitive, including health related rehabilitation. In particular, States Parties shall:
(e) Prohibit discrimination against persons with disabilities in the provision of health insurance, and life insurance where such insurance is permitted by national law, which shall be provided in a fair and reasonable manner;”
As a result, the Mental Healthcare Bill, 2016 was promulgated to frame a domestic policy in line with the Convention, which led to the enactment of the Mental HealthCare Act, 2017.
Mental Healthcare Act, 2017
The Mental Healthcare Act, 2017(‘Act’), came into force on May 29, 2018, with an objective to “provide for mental healthcare and services for persons with mental illness and to protect, promote and fulfill the rights of such persons during delivery of mental healthcare and services and for matters connected therewith or incidental thereto."
The introduction of the Act has not only helped understand the importance of protecting persons suffering with mental illness but also paved a path for the society to understand that persons with mental illness have the right to a dignified life.
Section 21(1) (a) of the Act provides that there must not be any discrimination in the form of gender, sex, sexual orientation, religion, culture, caste, social or political beliefs, class or disability. The highlight of the Act is Section 21(4) which mandates every insurer to provide medical insurance for treatment of mental illness on the same basis as is available for treatment of physical illness. Both the Convention and the Act recognise the value of a stable mental condition for a human being.
Role of Insurance Regulatory and Development Authority of India
The Insurance Regulatory and Development Authority of India (IRDAI) regulates all aspects of the personal insurance sector, under the IRDAI Act, 1999. The IRDAI has a supervisory jurisdiction over all insurance products sold by the various insurance companies.
In recent years, IRDAI has implemented several initiatives for the insurance industry, aimed at incorporating "treatment" for mental illness within the scope of insurance policies. This is mainly to cater to rising concerns about mental healthcare in India and legislative pushes to recognise the critical role that medical insurance plays in the treatment of mental disorders globally.
Insurance Act, 1938
‘Health Insurance Business’ is defined under Section 2(6C) of the Insurance Act 1938 as "the effecting of contracts which provide for sickness benefits or medical, surgical or hospital expense benefits, whether in-patient or out-patient travel cover and personal accident cover."
It must be noted that this definition of health insurance business under the Insurance Act does not specifically recognise or restrict coverage for illnesses which are psychiatric or psychological disorders.
Indian insurers have however, forged ahead, promoting and selling health insurance plans that only cover hospitalisation and medical costs related to physical illness. It is rather pertinent to pay heed to the fact that health insurance policies in India have historically and categorically excluded all forms of mental illnesses and/or treatments.
IRDAI Circular August, 2018
To do away with such exclusions and give effect to the provisions of the Act, the IRDAI issued a Circular dated August 16, 2018, mandating all insurance companies to cover treatment for mental illness under the scope of medical insurance, pursuant to Section 21(4) of the Act.
Subsequently, on September 27, 2019, the IRDAI published "Guidelines on Standardization of Exclusions in Health Insurance Contracts"(‘Exclusion Guidelines’), aimed at standardising exclusionary clauses in various health insurance policies in India.
IRDAI Circular, June 2020
The IRDAI through Circular dated June 2, 2020 mandated all insurance companies to publish their approach on insurance coverage to persons with disabilities and mental illnesses and HIV/AIDS, on their respective websites. The Circular was issued to educate and promote all policy holders with respect to availability of insurance coverage for mental illness treatments along with some general awareness about mental illness and its treatment protocol.
1. Gaurav Kumar Bansal v. Union of India and Ors: IRDAI’s failure to implement provisions of the Act
The IRDAI was seen abdicating from its responsibilities by failing to ensure successful compliance of its Circular dated August 16, 2018, towards implementation of Section 21(4) of the Act. This inaction came under the scanner before the Supreme Court by way of a public interest litigation in the case of Gaurav Kumar Bansal v. Union of India and Ors.
The Petitioner filed a request under section 6 of the RTI Act, 2005, and sought for an update on the implementation of the aforementioned Circular and effective implementation of Section 21(4) of the Act. However, it was noticed that none of the insurers were in compliance with the Circular and that the IRDAI did nothing to effectively implement its own Circular or condemn the inactions of the insurers.
The petition emphasised that while Section 21(4) of the Act, allows for the inclusion of mental illness in insurance plans, it was yet to be implemented which resulted in a great deal of difficulty for patients suffering from mental illness. The Apex Court accordingly issued notice to the Ministry of Health and Family Welfare and the IRDAI directing them to take necessary actions.
The Delhi High Court in response to a woman's demand for reimbursement of expenses for treatment of ‘Schizoaffective’ disorder, which was earlier denied by the National Insurance Company Ltd (‘NICL’) pursuant to an exclusion under clause 4.10 of the healthcare policy, held that that all insurance companies are liable to give effect to Section 21(4) of the Act. It asserted that mental illnesses ought to be covered without any discrimination.
The petition posed a significant question about insurance coverage for mental disorders and the provision of non-discrimination relating to such illnesses, as enshrined under Sections 21(1) (a) and 21(4) of the Act. The High Court after a detailed analysis, iterated that mental disorders must be treated in the same way as physical illnesses. As a result, the Court identified that availability of insurance “for mental disabilities or conditions is, therefore, not only important but is an essential need.”
The High Court also held that the decision of the Insurance Ombudsman in holding that the Act was not applicable to petitioner was untenable. The Act took effect in May 2018 and hence the exclusion in NICL's healthcare policy with regard to “all psychiatric and psychosomatic disorders/diseases”, as stated in clause 4.10, is contrary to law. Thus, the petitioner was entitled for reimbursement of her claim as per the provisions of the Act.
The High Court strongly criticised IRDAI and highlighted the fact that the regulator’s duties are extensive and critical and if an insurance provider fails to comply with any law / regulation / policy, the IRDAI cannot remain indifferent and immediate action must be taken. The IRDAI has a responsibility to thoroughly supervise and ensure that all insurance providers comply with the provisions of the Act for the benefit of those who receive mediclaim insurance.
Physical ailments have visible symptoms but mental illnesses do not always have visible physical manifestations. They can however have crippling and harmful effects. Given the ongoing pandemic, mental disorders are on a rise and must be addressed pro-actively. Having said that, simple issues relating to insurance coverage for mental illnesses and disabilities is an essential need, and must be concretized immediately to address bigger and larger concerns.
The efficient implementation of the Act and the IRDAI's directives are expected to improve the availability, accessibility, affordability, and de-stigmatization of mental health services in India, as well as provide a boost to the country's current mental health infrastructure. Further, following the decision of the Delhi High Court, revolutionary products with targeted coverage for mental illnesses and associated disorders are expected to be launched as they are indeed the need of the hour.
*The authors are Partner and Associate respectively with Shivadass & Shivadass (Law Chambers). The Authors would like to acknowledge the contributions of Ms. Sakshi Jain, a 4th year law student from School of Law, Christ (Deemed to be University), Bangalore.
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