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Oct 2, 2023

Rising Health Insurance Premiums: What’s Behind the Trend?

Healthcare is a fundamental need, and in today's world, medical expenses can quickly drain one's finances. In India, where healthcare costs are increasing at an alarming rate, having health insurance is more crucial than ever. However, the past few years have seen a worrisome trend of skyrocketing health insurance premiums, putting individuals in a fix. What are the reasons behind this trend, and how is it affecting people in India? This article delves deep into the issue providing insights into the causes behind the rising premiums and their impact on individuals.

Reasons for rise in Health Insurance Premiums

Premiums are one of the key factors in the decision of buying health insurance. However, a large number of people are hesitant of the purchase due to rising premiums. Here are a few reasons for an increase in premiums of health insurance plan:

1.    Increasing cost of medical treatment

With the advancement of medical technology and the availability of better healthcare facilities, the cost of medical treatment has gone up significantly. This, in turn, has led to an increase in the cost of health insurance premiums as insurance companies need to cover these high medical costs. Moreover, the cost of medication and medical equipment has also increased, adding to the overall cost of healthcare. Regardless, people need medical treatment and many of them depend on health insurance to cover their medical costs. This has resulted in higher insurance claims, which creates a higher demand for health insurance.

2.    Rise in lifestyle diseases

Another reason for the rise in health insurance premiums is the increase in lifestyle diseases such as diabetes, hypertension, and obesity. These diseases require long-term medical care and can be expensive to treat. Insurance companies, therefore, charge higher premiums to cover the treatment cost of these diseases. The rise in lifestyle diseases is partly due to changes in lifestyle and dietary habits. Moreover, the ageing population in India is also a contributing factor to the rise in lifestyle diseases. As people age, they are more likely to develop chronic diseases. This means the need for health insurance for individuals grows over time.

3.    Pre-existing medical conditions

Insurance companies also need to factor in the risk of insuring individuals with pre-existing medical conditions. Individuals with pre-existing medical conditions are more likely to require medical care, which increases the risk for insurance companies. To cover this risk, insurance companies charge higher premiums to individuals with pre-existing medical conditions.

4.    Fraudulent claims

The increasing number of fraudulent claims has also led to a rise in health insurance premiums. Insurance companies need to compensate for these fraudulent claims by increasing premiums for all policyholders. Fraudulent claims can be in the form of fake medical bills, false claims, or even non-disclosure of key information. Such instances can lead to a huge financial loss not just to the policyholder, but also to the insurance company. To cover the risk of this financial loss, higher premiums have to be charged.

5.    Regional healthcare costs

The cost of healthcare services in India varies significantly across different regions, with some areas having higher healthcare costs than others. Insurance companies adjust their premiums based on the treatment cost in different regions. Thus, as a policyholder, you may be charged different rates for the same coverage in different parts of the county. This depends on the healthcare costs in that specific region. For instance, the premiums in metro cities are higher than Tier 2 and Tier 3 cities. Moreover, the availability of healthcare facilities and services also varies across different regions in India. For example, a rural area might have a shortage of healthcare facilities. Hence, the cost of medical treatment in that area might be high. This can result in higher premiums for individuals living in such areas.

What can be done about it?

One way to address the issue of rising health insurance premiums is to encourage a healthier lifestyle. This can be done through various means, such as public health campaigns, workplace wellness programs, and incentivising healthy behaviour. By promoting healthy habits such as regular exercise, healthy eating, and avoiding tobacco and alcohol, individuals can reduce their risk of developing lifestyle diseases and requiring expensive medical treatment. Another way to tackle the rising health insurance premiums is to promote preventive healthcare. Preventive healthcare measures such as regular check-ups, vaccinations, and screening tests can help detect and treat health problems before they become more serious and require expensive treatment.

Conclusion

In conclusion, the rising health insurance premiums in India are a major concern, as they are making it difficult for individuals to access healthcare. To address this issue, individuals can take proactive steps such as living a healthier lifestyle and taking advantage of preventive healthcare services. Insurance companies can incentivize such behaviour by offering discounts or other benefits. By adopting healthy habits and smart practices like using a health insurance premium calculator, everyone can have access to affordable health insurance coverage.   *Standard T&C apply Insurance is the subject matter of solicitation. For more details on benefits, exclusions, limitations, terms, and conditions, please read the sales brochure/policy wording carefully before concluding a sale.

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