'Rs 1 cr health cover may NOT...': Insurance expert on rising health insurance costs 

Health and life insurance are crucial components of financial planning as they provide necessary protection in the event of unexpected medical expenses or debts following the policyholder's passing. A recent survey showed that healthcare costs in India are escalating by 14% annually. This double-digit inflation is directly contributing to the overall increase in healthcare expenses, the ACKO India Health Insurance Index 2024 highlighted.

Taking a note of the rising health inflation, Mahavir Chopra, Founder, Beshak.org, said in 1999, my father owned a robust health insurance policy with a coverage of 2 Lakhs which he found satisfactory. In 2010, I believed that a coverage of Rs 10 lakh was sufficient. However, today, a coverage of Rs 1 crore still seems daunting. Is it adequate now? 

Health insurance provides financial protection by assisting with the expenses of medical care. A monthly premium is paid to the insurance company in exchange for coverage of healthcare costs such as doctor visits, hospital stays, surgeries, medications, and tests.

In a series of post on social media X, Chopra noted:

1. India’s private healthcare is only getting more expensive.

The government spends just 2.1% of GDP on healthcare - one of the lowest in the world. Public hospitals are struggling, and most middle-class families don’t prefer to go there.

That leaves us with private hospitals, and we all know how expensive they are.

2. Because the demand for quality healthcare far exceeds supply.

Just look at the top hospitals wherever you live - there’s always a rush.
Beds are perennially unavailable.

(Have seen the MD of a giant company waiting at Hinduja hospital, Mumbai, with their family member, late night, patiently negotiating for a vacant bed. )

India has only
- 1 doctor for every 1,500 people
- 1 hospital bed for every 1,000 people - far below WHO’s recommended standards. 

3. Worst - with big corporate players entering healthcare, coupled with and probably because of no regulation on pricing, supply may grow, but pricing is likely to get even worse.

I hope I am wrong,  but it seems we are heading toward an American-style system, that depends totally on private hospitals that charge a bomb.

14% healthcare inflation may just turn out to be lower than what we may experience.

4. Hospitalization costs are zooming

Let’s look at some real numbers:
🔹 Appendix surgery: ₹70K (2015) → ₹1.5L (2024)
 🔹 Cataract surgery: ₹25K (2010) → ₹60K+ (2024)
 🔹 ICU per day: ₹5K (2015) → ₹15K (2024)
 🔹 Angioplasty: ₹1.5L (2010) → ₹3-7L (2024)

5. Lifestyle will lead to increased visits to hospitals

My 70-year-old aunt only has age-related issues, a cataract, and has been prescribed a knee replacement (which she is delaying)

But today, we see 35-year-olds getting diseases that earlier used to hit people in their 40s.

6. Heart surgeries, once common in the late 50s, are now happening in the late 40s.

📈 Cancer cases have gone up 42% in 10 years.
📈 Heart surgeries have increased by 200-300%.

7. Worse case scenarios?

We have just spoken about routine treatments - what happens when there’s a major medical emergency?

Worst-case scenarios can wipe out savings in no time.

Remember you don’t buy insurance just for regular hospital visits - you need it for situations where things go horribly wrong.

8. A liver transplant that costs Rs 30-40L today, at say 10% inflation, could easily touch ₹1.5Cr in 20 years.

ICU charges have already gone from ₹5K per day to ₹20K in just 10 years - what will they be in 2045?

9. Most importantly - when a family member is critically ill, you don’t make decisions based on cost.

You look for the best possible doctor, the best hospital. Period.

When my dad had a tumor (non cancerous, thankfully) of the size of a golf ball in his head, we didn’t think twice about finding the best surgeon.

That’s exactly what most people like you and me would do in such situations.

Go beyond their means to take care of their families.

10. Medical advancements will push costs even higher.

Treatments today are far more advanced than they were a decade ago - but they’re also a lot more expensive.

Cancer treatments used to cost 1/5th of what they do today.

Immunotherapy and targeted therapies have completely changed cancer care, but they cost 5-10X more than conventional chemotherapy.

11. And let’s not forget the mother of tail events we experienced - COVID - hospitals were overcharging left, right, and center.
- ICU charges touched ₹50-75K per day.
- Bills of ₹15-20L were common.

12.  the bottom line is
- Fitness, I think, not money, may really help you live the dream retirement life.
- We really don't know how much healthcare cover we will need.
- What we can only do is plan for the worst - buy the highest cover you can stretch to afford.

Premiums going up

According to insurance companies, the primary cause for price hikes in health insurance premiums is the increase in claims. Premiums do not incrementally rise each year but instead experience sudden increases periodically. Insurers typically adjust their rates every three years to align with the escalating expenses of medical care. Additionally, premiums escalate as individuals age, with more significant spikes in later years attributed to a surge in claims.

In the last decade, a majority of policyholders witnessed their premiums increase by 5-10% annually. This resulted in their Rs 100 premium growing to Rs 162-259 over the span of 10 years. Additionally, 38% of policyholders experienced a higher annual increase of 10-15%, leading to their Rs 100 premium escalating to Rs 259-404. Finally, 3% of policyholders encountered the most significant hikes, with their premiums jumping by 15-30% each year.