What is Medical Inflation? What are the Causes?

Posted on: Dec 23, 2022 | | Written by:

What is Medical Inflation? What are the Causes?

Published on December 23, 2022. EST READ TIME: 3 minutes

Have you lately heard people exclaim that the cost of a certain test or medicine or even consultation charges have increased drastically in recent times? Well, say hello to medical inflation. It is the cause behind the prices of medical equipment and treatment skyrocketing. And the ripple effect of this is that the premiums of healthcare plans are also increasing as insurers try to limit their risks. And this rise is irrespective of the risk profile. This means despite age, gender, and medical history, everyone is feeling the heat of rising prices of premiums. Let’s learn more about its causes and current inflation rates.

What is Medical Inflation?

A situation when there is an increase in the average and unit cost of healthcare services over time is termed as medical inflation. There is also another way to look at medical inflation or define it. Medical inflation can also refer to an increase in both unit cost and usage cost of services.

Causes of Medical Inflation and its effects on health insurance

There are several causes of medical inflation:

1. Advancement in technology:

With new technology, innovative treatments, and the discovery of newermedicines, managing and treating many diseases,such as cancer and heart diseases, is getting better. New-age technology can also detect and diagnose diseases with precision. However, all these come at a cost, thereby leading to a substantial increase in healthcare costs.

2. Demand in healthcare services:

Due to sedentary lifestyles, stress, and poor eating habits, there has been a rise in lifestyle diseases such as diabetes, hypertension, heart problems, etc. People spending more on healthcare has directly contributed to medical inflation in India.

3. Rising cost of raw materials:

With the increase in the cost of raw materials and emergency aid, the cost of healthcare is also on the rise.

4. Increase in medical tourism:

The increase inthe number of people travelling to India for treatment of several conditions, like cancer, organ transplants, etc., has led to an increase in the demand for services related to such illnesses. As a result, healthcare costs have seen a steady increase leading to medical inflation.

5. Change in cost per person:

This refers to the change in the unit cost of a medical procedure or treatment. In other words, this change is due to the rise in hospital personnel costs such as consulting fees, salaries and benefits to hospital staff, hospital consumables cost and other expenses like rent, property, technology, utilities, etc.

Current medical inflation rates in India

According to reports, in 2021, India recorded the highest medical inflation rate of 14% among Asian countries. China followed next with 12%, Indonesia and Vietnam at 10%, and the Philippines at 9%. This had a direct impact on consumers as health insurance premiums also increased. In FY 2022, while the retail premiums went up by 16.5%, group health premiums increased by 31%.

According to the Indian Health Insurance report by Motilal Oswal Financial Services Limited (MOFSL), the demand for health insurance in FY22 saw an overall growth of 25%. Many policyholders also increased their health insurance coverage due to medical inflation.

Frequently Asked Questions

1. Will medical inflation increase my health insurance premium?

In most cases, yes. But it is better to check with your insurance provider.

2. What causes medical inflation?

There are many causes, but the primary reason is the demand for healthcare services and the shortage of healthcare professionals.

3. How can I lower my health insurance premium?

There are several ways – buying health insurancecoverage early when you don’t have any ailments, using the NCB during policy renewal, following a healthy lifestyle, etc.

Conclusion

With medical inflation, it is essential to secure yourself and your family with the best health insurance in India to avail of quality healthcare without any financial worries. Consider the demands of both you and your near and dear ones when selecting a healthcare insurance policy that will pay for your associated costs in the event of medical emergencies. It can have a significant impact and greatly assist you in bringing down the cost of medical inflation. Ensure your parents have senior citizen health insurancebecause, with age, they need more medical attention, and it is not wise to spend their earnings on hospital bills. With robust medical insurance, we can beat medical inflation and have peace of mind, both mentally and financially.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

Health Insurance –How to Make Claims from Two Insurance Companies

Make Your Health Insurance Inflation-Proof with These Tips

IRDAI Reduces the Number of Health Insurance Returns that Insurers can File

Why Should You Choose In-Home Elderly Care Services?

5% GST on Hospital Room Rent: Who Will Feel the Pinch?