What is the story about?
World Health Day: Medical expenses and inflation in India are rising rapidly. If we analyse average medical costs and factor in medical inflation, it becomes
evident that these expenses are growing at an average annual rate of approximately 12 to 14 per cent.
Why the middle class should have health insurance?
Rising Medical Costs: Medical expenses are escalating at an alarming rate. From routine check-ups to major surgeries, healthcare costs are skyrocketing. Without health insurance, a single hospitalization can wipe out all your life savings or plunge you into debt.
Financial Security Against Unexpected Health Crises: Accidents and sudden illnesses can strike at any time, leading to unforeseen medical expenses. These emergencies can be financially devastating.
Access to Better Healthcare: With health insurance, you can choose from a vast network of hospitals and healthcare providers. This ensures that you receive superior medical care and guarantees timely, effective treatment without any delays.
Preventive Care and Early Diagnosis: Many health insurance plans provide coverage for regular check-ups and preventive care. This enables you to identify health issues at an early stage -- before they evolve into serious illnesses that may require expensive treatment.
Tax Benefits: Investing in health insurance not only provides you with financial security but also offers tax exemptions under Section 80D of the Income Tax Act. This reduces your total taxable income, resulting in additional savings.
Medical inflation in India is among the highest in the world
Take a look at the costs of surgeries and medical treatments, which clearly demonstrate the extent to which medical inflation has risen in India over the past five years.
According to Policybazaar, the costs for high-end surgeries are as follows:
| Surgeries |
2020 | 2021 | 2022 | 2024 | 2025 |
| Cancer | 30.1 | 34.6 | 39.4 | 44.6 | 50.8 |
| Heart Transplant | 20.5 | 23.6 | 26.4 | 29.9 | 34 |
| Liver cirrhosis | 14.7 | 16.9 | 18.9 | 21.3 | 24.3 |
| Kidney Transplant | 10.8 | 12.4 | 14.1 | 15.9 | 18.2 |
ET reported, quoting Rakesh Goyal, Director at Probus, that private healthcare is the primary driver of rising costs. Hospitalisation charges, advanced diagnostics, medical devices, and newer therapies continue to push treatment bills higher year after year.
According to ET's report, 'The Personal Loan Story,' the medical inflation rate in India stands between 12 per cent and 15 per cent annually -- one of the highest rates in Asia -- leading to a continuously widening gap between treatment costs and insurance coverage.
The report further states that, according to the IRDAI, health insurance coverage in India has grown from 288 million people in 2014 -- 15 to approximately 573 million people in 2023–24 -- effectively nearly doubling; nevertheless, its penetration remains low, standing at only about 40–42 per cent, as a result of which a large number of families remain deprived of adequate health coverage.
Health insurance premiums are also increasing
Every year, health insurance premiums are rising due to the increasing costs of healthcare and medical services.
"Health insurance premiums are also on the rise, with increases of around 10–15 percent projected for 2025, as insurers face higher claim costs" said Debashish Banerjee, Partner, Deloitte India as quoted by ET.
"There is a need for the government to initiate discussions with hospitals and insurers to explore ways to contain costs, including standardising billing practices and examining pricing for certain medicines and procedures," he added.
In conclusion, current indicators suggest that the level of medical inflation in India remains elevated. While this trend is expected to persist in the near future, concerted measures taken through mutual coordination among regulators, insurance companies, and healthcare providers can help mitigate its impact on policyholders.
(Disclaimer: The above article is meant for informational purposes only, and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)
