What would be your advice to people who are planning to take health insurance? – I have often been asked. My simple reply to them is to access their need and buy adequate insurance. However, this is too simplistic a response for a subject that needs a lot of research before buying the policies.
Only 15 percent of the population has some form of health insurance, making out-of-pocket healthcare payments in India amongst the highest in the world. Diagnosis of a disease at any point of time can lead to sudden panic. The major reason behind this panic is generally the high cost involved for medical and treatment for certain ailments or even injuries.
While most people have a health policy in place, many a time, when they actually need the money, they realise that they are falling short. They turn to their friends, families or dip into their savings to salvage the situation putting them in more debt. It is even worse if there is only one breadwinner in the family and is the afflicted person. Not only do they have todeal with the loss of pay while they are in the hospital, but also face hardship as they are unable to go to work during the recovery phase.
I wish to address here the key factors that push the cost of medical bills or in other words ‘Medical Inflation’. As per the 2017 Global Medical Trends Survey Report, medical inflation was at 12.5% in 2016. You must remember that observed trend is backward looking. This trend reflects actual change in medical costs that are influenced by plan design changes made during the year. But pricing trend is forward-looking.
This trend reflects predicted change in medical costs, without considering plan design changes or the impact of health improvement. The cost of medical treatment has ballooned and has got out of reach for the average household. As you would have imagined, rising general inflation will over time, increase the cost of medical procedures, staff cost, equipment cost and medicine cost which will automatically reflect on your bills.
The other major reason is the changing lifestyle and eating habits. India has the most number of people who are underweight, however, at the same time it is also in the top 5 for most number of people who are obese. Both underweight and obesity are well-known causes for several fatal conditions like heart diseases, diabetes, etc. The current fast food eating fad has contributed to the rise in chronic illness and obesity driving the cost of medical bills and inflated medical spending.
What usually goes wrong is that people rely on the health insurance that is given to them by their employer. Usually this is in the range of Rs. 1 lakh to 5 lakh, which is good for small expenses but will fall short when needed most. Also restricted customization options make it difficult for you to be covered for some of the more costly medical procedures that will give you a higher bill.
What it all means is that if you need to plan for medical emergency then you need to factor tomorrow’s cost, today. As a rule of thumb, to cover yourself for the next 10-15 years, you must take a cover that is two-three times the current treatment cost. In any case, it should not be less than Rs. 10 lakh for a person living in a metro or tier 1 city.
So what should you look for? You can make shopping for health insurance less work by knowing some basic and research well. You should look out for your total cost for healthcare, to pin down what you pay in total for health care, you need to know how health insurance works. Get the run-down on the amounts that make up your health insurance costs: copays, deductibles, coinsurance and out-of- pocketmaximums. In fact, there are plans that offer unique inflation shield features.
Just like you would have a portfolio for your investments, you should also build a portfolio for insurance.
The portfolio should have a healthy mix of life, non-life and health insurance. You should allocate a minimum of 30% of this portfolio for health insurance and should include hospitalization cover, pre-existing disease cover, critical illnesses cover, etc.
You can also get useful tools and services with your plan at no added cost. So, look for a health service company that gives you ways to save time, save money, and support your health. Here are examples of tools and services to look for:
Websites and mobile apps that help you quickly and easily find a doctor, manage your health care costs, view your claims and more – from your computer or smart phone.
24×7 service teams who can answer questions about your plan, coverage and services available.
Around-the- clock health information lines staffed by nurses who can answer medical questions and give health-related advice any time, day or night.
The one advice I always offer is that prevention is better than cure. By promoting preventive care and healthy lifestyle choices, you can help avoid catastrophic or chronic illnesses that lead to high claims. Taking care of your health by regularly exercising and eating right will ensure that you are in the pink of health at all times. And a good health insurance that will help take care of cost will give you the peace of mind.