Health insurance premiums are rising. What are the reasons behind?

Health insurance cost has increased recently. One of the main reasons is the increase in health care costs as premium for any insurance policy is ultimately dependent on costs or risk covered. Consider this: the health care inflation in our country is estimated to be 18% to 20% per annum.

Some of the factors, according to Ria Insurance Brokers, that are contributing to the cost are:

• Increase in salaries of good consultant doctors/ surgeons due to high demand for them because of our large population and large number of patients. In addition, patients from foreign countries also come to India under medical tourism and we also see migration of our medical personnel to developed world for better opportunities. Even the experienced Indian nurses and physiotherapists are in great demand in the world and they are too happy to migrate.
• High Real estate cost and high investment is required to set up a good super speciality hospital and it needs lot of funds. Which have to compete with other investments? Payment of high interest rates, commercial rate for electricity charges, high specifications air conditioning add to the operational costs.
• Install expensive modern equipment/ diagnostic equipment/ pathology lab equipment to remain competitive in the market.

According to Rajesh Kumar of NGO, Insurance Foundation of India “We feel that even though premium rates have gone up but ultimately it will be in favour of policyholders as the new policies cover wide range of illnesses such as mental health. There has been a taboo about mental illness and people have been keeping it under the carpet. The government has done a great job by bringing this disease in open, as a result now it will get attention and will be treated. Depression, one of the many diseases (mental illness) that leads to suicides and brings bad name to the society or the country.”

He added, as the average age of Indians is increasing (at present 73 years and in near future expected to touch 80 years) we will see increased number of patients of dementia and Alzheimer and this will be covered under the insurance policy. Need for consultants/specialists treating such patients will increase significantly. The clarity needed from insurers is will they treat it under domicile treatment or include it under day treatments? Will they pay for medicines being prescribed to be taken on long term basis?

Another reason is the fact that group insurance brings bulk business for insurers and is booked by insurers after lot of price cutting. Kumar said, “These discounted premiums are being subsidised by the individual/family/retail category customers. Maximum burden of this is being borne by senior citizens therefore we agree that their grudge against high premium rates is very valid.”