The Cost of Individual and Small-Group Health Insurance Is Projected to Increase in 2024
Health insurance policies have become an inevitable and integral part of Indian household’s budgets. It is not just because of the rising medical costs and prevalence of diseases requiring expensive treatments but also to ease off financial burden during the time of crisis. True to their beliefs, health insurance has extended a helping hand at the much-needed time for many.
With its primary goal of offering adequate financial coverage to policyholders against rising medical expenses, health insurance companies are offering various policies. Though insurance policy costs have been gradually increasing in the past decade, experts have predicted a steep rise in the upcoming years.
Understanding individual health insurance coverage:
Individual health insurance plan is one of the major types of health insurance plans. It is a type of policy that covers the hospitalization, out-patient, and medical bills of a single person. It can be bought for oneself, their spouse, children or parents. Both the premium rate and coverage amount of the policy is determined based on several factors, including the policyholder’s age and medical history, since they are tailor-made to meet the specific needs of the insured. One can also purchase add-ons to expand the coverage of individual health insurance plans. Since the policyholder will have a dedicated amount for his medical expenses, purchasing the policy for aged parents or people with severe health conditions is a smarter move.
Understanding small group health insurance coverage:
Small group health insurance coverage, as the name suggests, is a plan that small organizations and startups collectively offer to their employees. As per the Insurance Regulatory and Development Authority of India (IRDAI) guidelines, an employer should have at least 20 employees working in their company to become eligible for a group insurance policy. So, if a company has 25 to 50 full-time employees, then it is considered a small group, and they will have to opt for small-group health insurance coverage. Unlike individual health insurance or family floater plans, group health insurance plans do not have any open enrollment period. It means one can start a plan whenever they are ready.
Cost of insurance policies projected to increase:
The cost of both individual and small group health insurance policies is expected to climb at the steepest rates in the years to come. According to the Mercer and Willis Tower Watson’s recently released report, health insurance plans are likely to go up by 6% to 6.4% across the globe. On average, the health insurance industry has witnessed about 3% to 4% rise in policy cost in the last decade.
The group insurance policies are likely to increase by 6% in 2024, and the percentage would be the most significant price increase in almost a decade. The policy costs could go up by 6.6% if the employers do not make any cost-cutting changes to their current plans. Even otherwise, the price is expected to increase by 5.4%.
The increase in the cost of health insurance policies is mainly due to the steep rise in the price of treating patients. Some of the factors that contribute significantly to rising costs are as follows.
- Rising medical inflation: The cost of availing of quality healthcare has been increasing at an alarming rate. According to the National Health Systems Resource Centre, India’s medical inflation rate was 14% in 2022, i.e., healthcare expenses have gone up by 14% that year. Recent times have witnessed a significant rise in the cost of blood tests, CT and MRI scans, medical equipment and supplies and salaries for healthcare workers.
- Increasing cost of pharmaceuticals: Pharmaceutical companies have been gradually increasing the prices of existing drugs while releasing new medicines at a higher price. The trends are expected to continue in 2024 and the next years. Thanks to the advanced research taking place in the sector coupled with the rising inflation. The pharmaceutical costs are likely to go up by single or double digits in 2024.
- Increasing prevalence of chronic diseases: India has been witnessing a sharp increase in the prevalence of chronic diseases, including diabetes, cancer and cardiovascular diseases, in recent times. The rise in prevalence has increased the demand for quality healthcare services. Since these health conditions require long-term attention, the rising inflation, among other factors, is driving up the treatment costs.
Conclusion:
With the rise in medical inflation, the cost of medical equipment and drugs, and increased salaries for healthcare professionals, among other factors, experts have predicted a sharp rise in the cost of both individual and group health insurance policies. In this situation, it is wiser for the policyholders to delve deeper and shop for the best health insurance policy that suits their requirements and financial availability. It is best to compare and hand-pick the best health insurance policy.
