The ripple effect: Medical inflation and health insurance premiums

Health insurance premiums and medical inflation have a mutually beneficial relationship that impacts the whole healthcare system. People and families struggle with the changing dynamics of affordable healthcare as medical costs rise, affecting the precarious balance of premiums. Policyholders and providers alike must comprehend this complex cascade of effects.

What is medical inflation?

"Medical inflation" refers to the rising healthcare and medical services costs. These costs include diagnostic tests, medicines, hospitalisation charges, and doctor's fees. At times, inflation also includes procedure and treatment costs.

What is the health inflation rate, and what factors are driving it?

Astonishingly, India has the highest healthcare inflation rate in Asia, almost 14%. In the next five years, a medical treatment that can cost up to Rs. 5 lakhs today would cost up to Rs. 10 lakhs.

But why is this inflation so high?

1. The cost of hospital stays and treatments has constantly risen, indicating a relentless inflation in healthcare services.

2. Modern and advanced medical treatments are attached with higher charges, increasing inflation.

3. Drug costs are also increasing as an after-effect of the rising product prices.

4. There is also a rise in healthcare services as people become more aware of their health and lifestyle changes.

Effects of medical inflation on healthcare

People are drawn towards better medicines, more accessible and advanced treatments, and new technologies in the present healthcare system. Today, people have higher chances of defeating cancer and other such illnesses as compared to a few years back. Although it is excellent news, it has its consequences. This constant enhancement has led to higher medical insurance premiums.

Inflation is always making things difficult for people, and with higher premiums, it is a double attack. Many factors go into deciding the premium charges. This inflation rate has forced almost 71% of people to pay for healthcare expenses out of their own pockets. Additionally, the premium also remains constant in specific age groups. For instance, the premium will be higher for senior citizens and newborn babies. People can see a rise of 50% in the premium rates when they move from one age group to another.

Therefore, one should consider things such as understanding their coverage, analysing medical needs, choosing the right copayment and deductibles, and following a healthy lifestyle to manage the high premium rates.

Conclusion

A delicate balance must be struck in the always-changing relationship between medical inflation and health insurance rates to guarantee affordable and accessible healthcare. Beyond policyholders, the ripple effect affects insurers and healthcare providers. Achieving this balance necessitates teamwork, creative thinking, and a dedication to meeting the changing healthcare environment's demands. Through comprehension and management of this complex relationship, stakeholders can make a positive impact on a healthcare system that is more robust and inclusive, ensuring that everyone has access to high-quality care.

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