Why India must put a premium on affordable healthcare for its citizens

Millions depend on health insurance. Comprehensive coverage for diseases and medical procedures ensures that policyholders pay only for what they need

Health care is one of the largest and most crucial sectors of the economy, and has witnessed leaps of advance over decades. However, in tandem, the pace of medical inflation has also soared rapidly, making health care unaffordable. To bridge the gap between health care and its affordability, health insurance is a lifeline for millions of families. To put it in perspective, more than 90 million people spend more than 10 per cent of their total expenditure on healthcare. Not just this, the recent Sustainable Development Goals National Indicator Framework Progress report said that the proportion of households spending 10-25 per cent of their total expenditure on health care has also gone up since 2018.

Fortunately, despite the growing costs, health insurance in India continues to be more affordable than in global economies. In developed markets like the US, Japan or Germany, healthcare expenditure constitutes 10-12 per cent of gross domestic product (GDP) as opposed to India, where it stood at 2.1 per cent in FY23. If the premiums are adjusted against the purchasing power parity, health insurance is still highly affordable considering India’s per capita income.

The cost for tertiary care or procedures requiring advanced medical procedures like organ transplant or neurosurgery can range anywhere from Rs 8 lakh to Rs 24 lakh. Besides, the cost of treatment has been steadily on the rise, especially in the past five years. In Tier-I cities, the average claim size for infectious diseases grew by 168 per cent during FY18-23. The pandemic has also led to a rise of 112 per cent in average claim size for respiratory diseases in this period. Besides this, out-of-pocket healthcare expenditure can run as high as 70 per cent. The NITI Aayog pointed out in a 2021 report that around 30 per cent of the population is bereft of any kind of health insurance to cover medical costs.

Lifelong renewability: All health insurance plans now come with lifelong renewability. The insurer cannot reject your renewal unless there’s any kind of fraudulent activity. As one ages, the risk of chronic diseases goes up and it gets more difficult to be covered under health insurance. However, if you already have health insurance, you don’t have to watch out for waiting periods, pre-existing diseases or any other restrictions.

Regulatory initiatives: The authorities continue to empower the insurance ecosystem with forthcoming initiatives and regulatory support for every industry stakeholder. Schemes like Ayushman Bharat and Pradhan Mantri Bima Yojana are just a few examples where the government’s efforts have made insurance more accessible and affordable, especially for lower income groups. Additionally, regulatory reforms and introduction of guidelines to standardise insurance products have increased transparency and consumer confidence.

Affordability through customisation: Inflation has impacted every category of medical expense, including doctor consultation, surgery costs, consumables, and diagnostics, resulting in heavier bills for all. To address this, insurers now provide comprehensive coverage for various diseases and medical procedures, ensuring that policyholders pay only for what they genuinely require. For instance, you can opt for outpatient department (OPD) coverage which provides for expenses other than hospitalisation too. This flexibility increases affordability and helps individuals choose plans that suit their financial capabilities. Most importantly, insurers are constantly building high sum insured policies at affordable premiums now, offering high protection within budget.

Technological integration: Technology has revolutionised the insurance industry. Digital platforms are making health insurance accessible and transparent. It has helped streamline processes and bring about better operational efficiency, thereby reducing administrative costs and passing on the affordability to consumers. Increasing the application of analytics can be used to solve key issues like understanding the risk associated with products and providing utility products to customers so that they obtain maximum value from their purchases.

As we continue to witness innovation in the health insurance sector, it is imperative for stakeholders to collaborate and build a robust ecosystem that ensures a healthier and financially secure future for every Indian.

The writer is the founder of Policybazaar.com