Soaring inflation pushes up health insurance premiums; makes standardised care costlier
The Hindu
Rising health care costs in India lead to unsustainable premiums, prompting calls for regulation and market correction.
Since the COVID-19 pandemic, India is witnessing a surge in health care cost inflation making assured and standardised health care unviable for several sections of the society and pushing up health insurance premiums. Last year the country witnessed a health care cost inflation of 14% even while general inflation stood in single digits. Health care market experts note that this level of escalation is unsustainable, and market correction should be kicking in soon.
Speaking to The Hindu, Sumit Bohra, president of the Insurance Brokers Association of India (IBAI) notes that currently in India the rising health care cost and the growing health insurance premiums are feeding each other.
“This is a vicious cycle and at present we are witnessing claim amounts of 90%. One-third of the insurance sector has been captured by the health insurance segment which is growing at the rate of 19-21% annually and is expected to grow further,’’ he said.
Listing out the reasons for health care costs becoming dearer Mr. Bohra noted that concentration of specialised doctors in the private sector, overcrowding in government hospitals (leading to long delays etc.), the price flexibility that insurance cover offers (people spend more when they have a health insurance cover), growing demand and availability for health care interventions are all contributing factors.
Seconding this trend ACKO General Insurance in its recent report notes that hospitalisation in India soared 12.8% in 2023-2024 compared to the previous financial year according to an analysis of health insurance claims with the average claim size in India for 2023-24 being ₹70,558, up from ₹62,548 in the previous financial year.
Additionally, the report notes that the costs of common medical procedures have risen. An angioplasty now comes at an expense of ₹2-3 lakh compared to ₹1-1.5 lakh in 2018. Similarly, kidney transplant costs have doubled from ₹5-8 lakh in 2018 to ₹10-15 lakh in 2024. According to the company, this could further double in the next couple of years.
Health insurance, also known as medical insurance plans/policy, is a financial tool that covers the cost of medical treatment with a wide variety now available in the Indian market.
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