India has been witnessing a rapid rise in chronic diseases in recent times. It has been rare to find families without any chronic diseases like diabetes, cardiovascular diseases, obesity and cancer, among others. Thanks to the immense changes brought in our lifestyles. The ACKO India health insurance index 2024 report also revealed that the risk of tumours has increased by 2.8 times after one turn 40 in the country and the number of cancer patients has increased by 13% between 2020 and 25. The report has warned that India might soon become the cancer capital of the world. As per the report, the risk of cardiovascular diseases triples between the 30 and 40 age groups.
Diagnosed with these diseases, one does not have many options but to seek medical intervention to safeguard their lives. But, in the last few years, many have burnt holes in their pockets without being able to afford healthcare. This is mainly due to the medical inflation, which is growing at a speed higher than the normal inflation of the country. Not just that, the medical inflation is accompanied by the increasing cost of pharmaceuticals. Let’s delve deep into the topic to understand the factors that increase the size of our medical bills.
Key drivers of healthcare costs
- Rising medical inflation: The cost of availing of quality healthcare has been increasing at an alarming rate. According to the National Health Systems Resource Centre, India’s medical inflation rate was 14% in 2022, i.e., healthcare expenses have gone up by 14% that year. ACKO’s report revealed healthcare inflation was reported at 14% in 2023 in the country. Recent times have witnessed a significant rise in the cost of blood tests, CT and MRI scans, medical equipment and supplies and salaries for healthcare workers.
- Increasing cost of pharmaceuticals: Pharmaceutical companies have been gradually increasing the prices of existing drugs while releasing new medicines at a higher price. The price rise has been influenced by multiple factors, including patent protections, supply chain issues and global market dynamics. The trends are expected to continue in 2024 and the next few years. Thanks to the advanced research taking place in the sector coupled with the rising inflation. The pharmaceutical costs are likely to go up by single or double digits in 2024.
- Increased demand for healthcare services: India’s burgeoning population, coupled with an ageing demographic, has led to higher demand for healthcare services. Also, the country has been witnessing a sharp increase in the prevalence of chronic diseases, mainly diabetes, cancer and cardiovascular diseases, in recent times. The rise in prevalence has increased the demand for quality healthcare services. Since these health conditions require long-term attention, the rising inflation, among other factors, is driving up the treatment costs.
- Health insurance coverage gaps: Many families in the country have been shelling out from their pockets during medical emergencies due to inadequate or no insurance coverage. It is mainly because of the misconception that health insurances are unnecessary when you have taken life insurance policies. This unawareness, in turn, has been depleting the savings of the families during emergency situations.
Health insurance
In addition to improving public healthcare services and focusing on preventive health programmes, one can reduce out-of-pocket expenses during a health emergency by ensuring adequately. This in turn would save the families from bearing the financial burden and exhausting all their hard-earned savings at the time of crisis.
A health insurance policy is a contract between an individual and the insurer under which the latter agrees to bear some of the former’s medical expenses during a medical emergency. An individual must pay a premium to the insurer to avail of coverage for medical expenses. With the rise in medical inflation and the prevalence of chronic diseases, purchasing health insurance coverage takes a forward seat during financial planning as it safeguards one from unexpected medical expenses. Policies are available at various prices based on the level of coverage that one might require.
Types of health insurance
Since a single health insurance policy is not sufficient to cater for the unique requirements of every individual, insurers have introduced numerous types of policies. Below are some of the commonly available health insurance policies.
- Individual health insurance: Individual health insurance is a type of policy that provides coverage to cover an individual’s hospitalisation, outpatient care, and medical bills. It can be for oneself, their spouse, children or parents. Since the individuals do not share their insured amount with anyone, exhaustion of coverage amount will not impact others. The age of the insured and the sum he wishes to insure determine the policy’s premium.
- Family floater health insurance: This kind of health insurance policy divides the insured amount among the covered family members. It covers multiple family members under a single coverage. If one of the covered members claims a specific amount then only the remaining amount from the policy will be available to the other members.
- Group health insurance: As the name suggests, group health insurance coverage is a plan that organisations and companies collectively offer to their employees. As per the Insurance Regulatory and Development Authority of India (IRDAI) guidelines, an employer should have at least 20 employees working in their company to become eligible for a group insurance policy.
- Senior citizen health insurance: A senior citizen health insurance plan is one that has been specifically created to meet the medical demands and costs of people over the age of 60. It assists patients in paying for hospital stays and medical care at the hospital of their choosing. It offers numerous benefits like Pre-existing disease coverage, cashless hospitalisation, pre- and post-hospitalisation coverage, preventive health exams and tax advantages.
Conclusion
Healthcare costs are constantly rising and have turned into a significant burden for many households. More than often, it has been leading to financial hardship and reducing quality of life. Addressing this issue requires comprehensive reforms in healthcare policy, insurance coverage and public health initiatives. This in turn will ensure that families can access necessary care without sacrificing their financial stability.