Why It’s Important to Consider Medical Inflation Before Buying Health Insurance

The nursing business in India has changed. With the advent of private hospitals, we’ve seen a big increase in the quality of care, but we’ve also seen a significant increase in the cost of care. As private hospitals increasingly become the first choice for caring for our loved ones, it has pushed up the average cost of hospitalization, surgery and testing. A 2011 World Health Organization report said the private sector accounted for 68 percent of India’s healthcare spending. For those of us living in India, this amounts to a choice between unaffordable private medical care that is beyond our insurance coverage, or going to a government hospital and waiting in an endless queue for basic treatment.

current inflation rate

As we all know, medical inflation is much higher than overall inflation. India’s oft-cited healthcare inflation figure is 15% per annum, compared with 67% overall inflation over the past few years. These costs have been reaching new peaks since the second wave of Covid-19. Medical inflation has now risen to about 18-20%. Think about your health insurance and with this inflation rate, even five years from now, that will be enough.

India has its own special reasons for medical inflation. In a country of over 1 billion people, we have an acute shortage of qualified healthcare professionals. Brain drain syndrome means that while a large number of Indians are trained to become surgeons and specialists, very few of them end up working in India. The scarcity of these specialists drives up salaries and limits who can afford them. Diagnostic equipment is usually imported and expensive. The same goes for most technologies used in healthcare – India generally follows a model developed in the West.

Then there are the patients. More and more patients are opting for higher class rooms and longer hospital stays. This has resulted in hospitals taking up more space to meet the needs of this small group of patients, while shrinking the space available to the general public. The principle of supply and demand has once again pushed up the prices of low- and medium-grade wards.

The Cost Impact of Medical Inflation

Let us understand the impact of inflation on hospital costs: Assuming a medical inflation rate of 15%, a procedure that costs Rs 1 million today will cost Rs 4 million in 10 years. 1.6 million rupees in 20 years. Consider your health, lifestyle and medical history today; try to imagine what your health will look like 20 years from now. For most of us, that paints a pretty grim picture.

Fighting medical inflation

With medical inflation going on, you’re going to need more health insurance than you think. The cost of treatment has been increasing, especially for serious diseases. If a patient needs to be hospitalized for an extended period of time, medical costs can skyrocket.

Purchasing health insurance is critical after taking into account the costs and inflation that may occur over the next 20 to 30 years. It’s a good idea to buy higher coverage – the younger the applicant, the higher the coverage should be, as they will need care for more years. In fact, health insurers have also started offering higher coverage up to Rs 30 crore.

There are many things you can do to expand the coverage your current plan provides. Top-up plans are a great way to add mulch to your existing base mulch. If your cost exceeds what the basic plan offers, the top-up will take care of it. You may also consider purchasing a new policy that offers a large amount of coverage and the content is more suitable for you.

in conclusion

With medical inflation on the rise, having health insurance has become a necessity. The current lifestyle of many of us, the way we live and work, and the incidence of pollution in the places where we live, all contribute to increased rates of disease and infection. We need to contribute to our own health in many ways. Taking better care of our diets, exercising regularly, proactive testing, and regular doctor visits all play a role. But, at the end of the day, being able to pay for the treatment you need becomes the biggest factor in your recovery.

Use the right health insurance policy to give you enough protection to best fight your illness.

(Anuradha Sriram is Chief Actuary of Aditya Birla Health Insurance)

Posted on: Sunday, May 22, 2022 at 7:00am IST