Medical Inflation in India

  • Author :
  • TATA AIG Team
  • Last Updated On :
  • 25/09/2024

Inflation in India has hit all the sectors and the medical sector is no exception. Multiple reports published on the subject of medical inflation indicate there has been a constant rise in medical cost and healthcare services in recent years.

The ever-increasing medical inflation in India has a significant impact on health insurance rates, irrespective of the type of policy. Let us understand how medical inflation affects the premium rates and the policyholders.

What is Medical Inflation?

Medical inflation can be defined as the increase in the cost of medical treatments and services. It includes the cost of medical procedures, doctor fees, cost of medicines, hospitalisation charges, etc. Inflation also affects the availability of medical services because the cost of medical supplies and services rises faster than the other goods and services.

The medical inflation rate in India is rising at an alarming rate, which is highly concerning. It affects the overall medical treatment services and procedures, directly affecting the health of the population.

What are the Causes and Effects of Medical Inflation

Let us have a look at the underlying factors leading to medical inflation in India and their effects:

Rise of Medical Tourism

In recent years, India has emerged as a preferred destination for medical tourism among the foreign population. Since India provides quality medical facilities at a highly affordable rate, people from other countries choose to come here to get their medical services for organ transplants, cancer treatment, heart surgery and other serious health conditions.

Therefore, there is a high demand for medical treatment facilities in India, leading to a rise in the cost of services.

Technological Progress

A lot of technological progress has taken place in India, which has brought forth quicker and more effective treatment of many serious diseases, including heart diseases, cancer, etc. Modern medical equipment and technology require a huge investment in terms of money as they are developed in foreign countries and then imported into India. Therefore, it leads to a rise in the cost of treatment and medical services.

Demand For Medical Facilities

Healthcare is one area where people are okay with overspending. Foreigners also spend a significant amount on healthcare services in India, as their country's currency is stronger. These factors create a high demand for medical services, which in turn leads to an increase in their cost.

Rising Cost Per Patient

The cost of treating per patient is dependent on several other factors, such as the cost of medical supplies, rent, doctor fees and other expenses. A rise in these expenses changes the cost per patient, leading to medical inflation.

Rising Cost of Medical Raw Material

Apart from freight charges and import taxes, the cost of raw materials has increased in recent years. Together, these factors lead to an increase in healthcare inflation.

As medical inflation rises due to various reasons, it directly affects the end consumer. As the cost of medical facilities increases, the insurance company has to pay higher compensation. Due to the rising cost of medical facilities, insurance premiums rise, leading to a burden on the policyholders.

Medical Inflation Rate in India

The demand for medical insurance in India continues to rise despite the increase in medical inflation. However, the alarming rate of inflation is a cause of concern as it has a direct impact on the citizens. The inflation rate in India is highest among the Asian countries, surpassing China, Indonesia and others.

The following table depicts the medical inflation rate in India and a few other countries:

Country Rate of Medical Inflation
India 0.14
China 0.12
Vietnam 0.1
Indonesia 0.1
Philippines 0.09

The Effect of Medical Inflation on Group Health Insurance?

The rising medical inflation in India has severely impacted the health insurance industry, which, in turn, has affected all sections of the population in India, including the workforce sector. Due to the increasing insurance premiums, employees do not have a choice but to cover the majority of their medical expenses on their own.

In India, only a limited workforce receives health insurance benefits from their employers as the cost of group policies has increased due to inflation. In such cases, a vast majority of the workforce is forced to skip their routine health checkups. Many employees also neglect doctor consultations due to the fear of additional medical expenses that may come up.

It is also essential to mention that only a limited percentage of employers provide telehealth support to employees, which further sheds light on the effect of medical inflation. However, there is a need for employers to step up and provide coverage to their employees with a corporate mediclaim policy.

The workforce forms the backbone of the country’s economy and has the right to receive the best healthcare assistance. Hence, employers provide them with an adequate group mediclaim policy to ensure their good health.

If mediclaim inflation is the concern, employers can rely on a reputed insurance provider such as Tata AIG for affordable and broad insurance coverage for their employees. Among the various types of business insurance in India, Tata AIG also offers group health insurance.

You can get comprehensive coverage for employees and their families, along with zero waiting period, pre and post-hospitalisation expenses, daycare procedures, domiciliary expenses and many more benefits.

Conclusion

Medical inflation is the increase in the cost of medical facilities and treatment due to various factors, including medical tourism, high demand for healthcare facilities, technological advancements, etc. Inflation of healthcare facilities imposes a greater burden on the population as the insurance premiums start rising.

However, one can tackle the effects of inflation by choosing the right policy, maintaining a healthy lifestyle, and choosing appropriate deductibles.

FAQS

What is the best way to deal with medical inflation?

One can invest in a comprehensive insurance policy to ensure broader coverage against various health concerns. Investing in an insurance policy is more beneficial than spending money out of your pocket in times of medical emergency.

What is group medical policy?

A group medical policy is a type of insurance which offers coverage to a group of people working in an organisation. Under such an insurance policy, the employees get medical coverage for themselves and their family members. The employers pay the premium of such health insurance.

Who should buy group health insurance?

Group insurance can be bought by start-ups, small businesses, mid-sized companies, large corporations, associations, institutions, etc.

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Your policy is subjected to terms and conditions & inclusions and exclusions mentioned in your policy wording. Please go through the documents carefully.

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