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.

What is a Health Insurance Premium?

A health insurance premium is the amount you pay periodically (monthly, quarterly or annually) to an insurer to keep your health insurance policy active. It covers the cost of medical services, including hospitalisation, doctor visits, diagnostic tests and more, depending on your policy terms. The premium amount varies based on several factors, such as age, medical history and the coverage level you choose. A higher premium typically provides more extensive coverage or better benefits, while a lower premium may come with limited options.

Key Factors Affecting Health Insurance Premiums

• Age: The older you are, the higher your premium, as the risk of illness and claims increases with age.
• Pre-existing Conditions: Individuals with pre-existing conditions such as diabetes, hypertension, etc., may have higher premiums due to increased health risks.
• Coverage Type: A higher coverage amount or adding riders (like maternity cover) will increase your premium cost.
• Policy Duration: Long-term policies often come with discounts, while short-term policies may have slightly higher premiums.
• Lifestyle Habits: Smoking, alcohol consumption and a sedentary lifestyle can raise premiums, as these increase the risk of health issues.
• Geographical Location: Premiums may vary depending on the region you live in, as healthcare costs differ across areas.
• Family Size: If you opt for family coverage, the premium will increase based on the number of members and their ages.
• Claim History: If you’ve made several claims in the past, insurers might increase your premium or offer limited renewal options.
• Insurance Company: Different insurers have varying pricing structures, so comparing premiums from multiple companies can help you get the best deal.

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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 to purchase due to rising premiums. Here are a few reasons for an increase in premiums of health insurance plan:

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.

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.

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.

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.

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.

How to Reduce the Burden of High Health Insurance Rates

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.

How to Avoid or Reduce Health Insurance Premium Hikes

• Opt for a Higher Deductible: Choose a higher deductible to lower your premium costs. However, this means you will pay more out-of-pocket when making claims.
• Maintain a Healthy Lifestyle: Avoid habits like smoking and excessive drinking. Staying healthy can lower the likelihood of illness, which could result in lower premiums over time.
• Compare Plans Regularly: Review your policy annually and compare it with other options in the market to ensure you’re getting the best value for money.
• Add Family Floater Plans: Family floater policies are generally more cost-effective than buying individual policies for each member, helping you save on premiums.
• Choose a Plan with Comprehensive Coverage: While basic plans may seem cheaper, they might lead to higher out-of-pocket expenses. Opt for a plan with adequate coverage for your needs.
• Stay Within the Network of Hospitals: Choosing an insurer that offers access to a wide network of hospitals, like Bajaj Allianz General Insurance Company, which provides access to 18,400+ cashless hospitals, can help reduce hospitalisation costs and prevent premium hikes.

Why Choose Bajaj Allianz?

Bajaj Allianz General Insurance Company is known for offering comprehensive health insurance plans that provide peace of mind when it comes to managing healthcare expenses. With extensive coverage, personalised plans and easy access to 18,400+ cashless hospitals across India, Bajaj Allianz makes healthcare affordable and accessible. Their user-friendly claim process, along with added benefits like wellness discounts and preventive care, ensures you get the best value for your premium. With Bajaj Allianz, you’re not just securing your health but also ensuring that you’re covered in times of medical need.

Read More: How to Lower Health Insurance Premium?

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.  

FAQs

When are Health Insurance Premiums the Highest?

Health insurance premiums are typically highest when you’re older or when you have pre-existing medical conditions. Additionally, premiums may increase during policy renewal if you make frequent claims.

How to Avoid Premium Hikes at Renewal?

To avoid premium hikes, maintain a healthy lifestyle, review your policy regularly and opt for higher deductibles. Also, ensuring that you’re not making excessive claims can help keep premiums low.

Why Do Premiums Increase Every Year?

Health insurance premiums increase annually due to rising healthcare costs, inflation and increased risk associated with ageing or changes in your health condition.

Does Lifetime Renewability Control Premiums?

Lifetime renewability does not necessarily control premiums but ensures that you can renew your policy without restrictions, regardless of your age. However, premiums may still increase with age or claims.

Is There a Tool to Estimate My Premium?

Yes, many insurance companies offer online premium calculators that help you estimate the premium based on your coverage requirements and personal details.

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