Soaring Medical Inflation: A Closer Look at Rising Health Expenses in India


Soaring Medical Inflation: A Closer Look at Rising Health Expenses in India

January 03, 2024
Soaring Medical Inflation: A Closer Look at Rising Health Expenses in India

Did you know that has one of the highest medical inflation rates in Asia, a whopping 14%. A rate of 14% means that a medical procedure that costs Rs 5 lakh today may cost about Rs 10 lakh in 5 years.

The significance of these rising costs extends beyond mere statistics, impacting individuals and the healthcare system at large. As health expenses soar, the ripple effect on the Indian society is huge.

Factors driving the surge

Inflation in healthcare services has been relentless, with costs of treatments and hospital stays increasing steadily. The adoption of advanced medical technologies, while beneficial for patient care, comes with higher costs.

Additionally, drug prices have been on an upward trajectory often because of rising input prices.

Alongside demand for health services is on the rise, both because of rising awareness about health and increase in lifestyle-related diseases, such as diabetes and heart disease.

Impact of medical inflation and what can be done to fix it

For individuals and families, the rising cost of health services spells financial strain. Many are burdened with hefty medical bills, often leading to a financial crisis. This situation is exacerbated for those without adequate health insurance, forcing them to dip into savings or incur debt.

Health insurance plays a pivotal role in mitigating the impact of rising health expenses. In India, the health insurance sector has been growing, but it still doesn't cover a large portion of the population.

For those with insurance, it provides a crucial financial safety net. However, there are concerns about the effectiveness of these insurance schemes in offering comprehensive coverage, especially for high-cost treatments and medications.

Government initiatives have been instrumental in addressing these challenges. Schemes like Ayushman Bharat aim to provide health insurance to the underprivileged, alleviating the financial burden of healthcare. These initiatives are vital steps towards making healthcare more affordable and accessible to the broader population.

Thanks to government schemes like Ayushman Bharat, about 70% of the Indian population has health insurance. But this means that as many as 30%, or 40 crore Indians, have no health insurance.

What lies ahead?

The correlation between healthcare affordability and the quality of services presents a conundrum. In pursuit of affordable healthcare options, individuals often face trade-offs, sometimes compromising on the quality of care. This dilemma underscores the need for a balanced approach that ensures affordability without sacrificing quality.

Healthcare providers, too, bear the brunt of rising health expenses. Hospitals and medical professionals face financial pressures in delivering quality care while managing operational costs. This scenario is particularly challenging for smaller, rural healthcare providers who operate with limited resources.

Looking ahead, the trajectory of health expenses in India is anticipated to continue its upward trend. Factors such as an aging population, advancements in medical technology, and increasing prevalence of chronic diseases will likely contribute to this rise.

However, with concerted efforts from the government, healthcare providers, and the insurance sector, there is hope for a more balanced and sustainable healthcare economy. The focus must be on enhancing healthcare accessibility and affordability while maintaining high-quality care, ensuring that health expenses do not become a debilitating burden for the Indian population.

R. Kalyanaraman
by R. Kalyanaraman

Chief Executive Officer

I am a sales guy at heart with utmost willingness to listen to people – customers, employees, competitors et al. Nothing gets me a bigger adrenaline rush than an interesting conversation with my customer!