Mental Health and Insurance in India: Challenges, Solutions, and Legal Framework

I. Introduction: The Growing Need for Mental Health Insurance in India

Mental health conditions have been on the rise in India, with the National Mental Health Survey indicating that nearly 1 in 7 Indians experience mental health issues. This surge in mental health needs has highlighted the role of insurance companies, which can offer financial support for mental health care. However, mental health insurance in India faces substantial challenges that stem from legal, cultural, and systemic factors. The Constitution of India, in its various provisions related to health and equality, provides a robust basis for addressing these issues and ensuring equal access to mental health care.

II. Challenges in Mental Health Insurance in India

1. Limited Coverage and Exclusions in Policies

Many insurance companies still limit or exclude coverage for mental health treatments, often due to ambiguity in policy terms. The Mental Healthcare Act (MHCA), 2017, requires insurance parity between physical and mental health, but enforcement is often inadequate.

• Lack of Parity with Physical Health

Mental health conditions are often perceived differently from physical ailments, which affects insurance coverage. This bias creates a fundamental inequality in health insurance.

• Insufficient Awareness, Stigma and Societal Bias

Social stigma surrounding mental health impacts individuals’ willingness to seek treatment and hinders the demand for mental health insurance. This stigma affects both patients and insurers, leading to policies that prioritize physical health.

• Ambiguity in Policy Definitions and Lack of Treatment Standards

Insurance policies often lack clear guidelines on mental health coverage due to the absence of standardized definitions for various mental health conditions.

• Cost Implications for Insurance Companies

 Long-term treatment costs associated with mental health conditions lead insurers to avoid or restrict mental health coverage. This reluctance affects the scope of policies and their affordability.

• Compliance and Enforcement Issues:

Despite the legal mandate for mental health coverage, enforcement is weak, and many insurers only partially implement mental health provisions. Insufficient regulatory oversight makes it difficult to ensure compliance.

• Limited Mental Health Infrastructure:

The shortage of mental health facilities and professionals in India limits access to care and challenges insurers in providing adequate coverage. This gap in infrastructure restricts policyholders’ access to essential mental health services.

III. Legal Framework and Key Case Laws

1. Mental Healthcare Act, 2017

The MHCA, 2017, marked a transformative step, mandating that mental health be given equal importance to physical health in all aspects, including insurance. Section 21(4) requires insurance companies to cover mental health on par with physical health, embodying the principle of non-discrimination.

• IRDAI Mandates and Circulars

In 2018, the Insurance Regulatory and Development Authority of India (IRDAI) issued a circular instructing insurer to include mental health coverage in all health policies. The circular reiterates the importance of complying with MHCA provisions and thus aligns with constitutional rights to equality, dignity, and health.

• Important Case Laws

a. Justice A.K. Sikri v. Union of India (2019)

• Background: The Supreme Court of India, through a public interest litigation led by Justice A.K. Sikri, examined issues around the implementation of the Mental Healthcare Act, 2017. The case emerged from concerns about the widespread discrimination in insurance policies, which often excluded or restricted mental health treatment coverage.
• Judgment: The Court underscored the importance of enforcing the MHCA, 2017, which mandates that mental health be treated on par with physical health in insurance policies. The judgment referenced Article 21 (Right to Life) and Article 14 (Right to Equality), asserting that failure to provide mental health coverage in insurance policies violated both the Act and the Constitution.
• Significance: This case set a precedent by interpreting the MHCA, 2017, in line with constitutional principles. It reinforced that mental health cannot be excluded from general health insurance policies and directed the Insurance Regulatory and Development Authority of India (IRDAI) to enforce this mandate rigorously.

b. Rakesh Kumar and Anr. v. National Insurance Co. Ltd.

• Background: Rakesh Kumar, the petitioner in this case, had a health insurance policy that explicitly excluded mental health conditions. He challenged this exclusion, arguing that it violated his right to equality and his right to health as enshrined in the Constitution and the MHCA, 2017.
• Judgment: The court ruled that excluding mental health from insurance policies was unconstitutional. It held that such exclusions were in direct contradiction to the MHCA, which legally mandates mental health parity. The court observed that mental health is an inseparable part of overall health and must be equally accessible and covered under health insurance.
• Significance: This ruling was a significant reinforcement of the MHCA’s mental health parity provision. It highlighted the judiciary’s role in interpreting legal mandates in a way that aligns with constitutional rights, emphasizing that any discrimination against mental health treatment in insurance policies contradicts the fundamental right to equality (Article 14) and dignity (Article 21).

c. Sneha Kalita v. United India Insurance Co. Ltd. (2021)

• Background: In this case, Sneha Kalita filed a complaint against United India Insurance Co. Ltd. for denying her claim related to mental health treatment. She argued that the denial was against the provisions of the MHCA, 2017, which mandates mental health insurance coverage on par with physical health.
• Judgment: The High Court ruled in favor of Sneha Kalita, stating that insurance companies cannot exclude or restrict claims for mental health treatments. The court further emphasized that the IRDAI’s directive to include mental health in insurance policies must be strictly followed, and insurers failing to comply could face legal consequences.
• Significance: This judgment emphasized the enforceability of the IRDAI’s mandate and the MHCA’s provisions. The court’s decision reaffirmed that mental health coverage is a legal obligation for insurers. It also highlighted the importance of judicial oversight in ensuring that mental health parity is not only legislated but also implemented effectively.

d. Puttaswamy v. Union of India (2017) (Right to Privacy)

• Background: The Supreme Court’s landmark judgment in the Puttaswamy case established the right to privacy as a fundamental right under Article 21 of the Constitution. While the case itself was focused on privacy rights, it has implications for the confidentiality and autonomy of mental health patients in India.
• Relevance to Mental Health: Privacy is crucial in mental health care, where stigma can deter individuals from seeking help. By establishing privacy as a fundamental right, this judgment indirectly reinforces the need for mental health policies that respect patient confidentiality and ensure autonomous decision-making in treatment.
• Significance: This case has contributed to mental health rights by solidifying the constitutional importance of privacy and dignity, which are particularly relevant in sensitive areas like mental health. It bolsters the argument that mental health care must include protections for patient confidentiality and autonomy.

IV. Solutions to Address Challenges in Mental Health Insurance

1. Strengthening Compliance and Accountability

Enforcement of the MHCA, 2017, and IRDAI mandates should be prioritized. Courts and regulatory bodies could introduce penalties for non-compliance, fostering accountability among insurers.

• Standardizing Diagnostic and Treatment Protocols

Standardized guidelines for mental health diagnoses and treatment, developed by health experts and implemented nationwide, would help insurers better understand the scope of mental health treatment, making policies clearer for policyholders.

• Encouraging Public-Private Partnerships

Collaborations between the government and private insurers could lead to shared responsibility in covering high-cost mental health treatments. Such partnerships could ensure that insurers aren’t financially burdened while expanding coverage for policyholders.

• Addressing Stigma through Educational Campaigns

Public awareness campaigns that destigmatize mental health, run by both the government and insurance companies, could encourage people to seek treatment and inquire about insurance coverage, normalizing mental health care.

• Integrating Constitutional Values into Insurance Policies

Aligning insurance policies with constitutional principles—such as non-discrimination (Article 15), equality before the law (Article 14), and the right to life and dignity (Article 21)—can create a legally robust foundation for mental health coverage. This alignment would require insurance companies to operate under ethical and legal obligations to respect these rights.

• Introducing a Mental Health Support Fund

The government could establish a mental health support fund for individuals needing long-term or intensive mental health care. This fund would reduce financial strain on both the insured and insurance companies, ensuring sustained support for chronic conditions.

V. Conclusion

The need for mental health insurance in India has never been more critical. While there are legal mandates, challenges rooted in stigma, policy ambiguity, and coverage exclusions continue to hinder equitable access to mental health care. By leveraging constitutional principles like equality, dignity, and the right to health, along with the enforcement of MHCA, 2017, India can create an inclusive framework for mental health insurance. Through judicial support, regulatory compliance, and social awareness, India has the potential to advance mental health parity in insurance, ensuring that mental health care becomes accessible, equitable, and dignified for all.

Contributed By: Adv. Rani Gupta