Insuring rising cost of surgery

Not long ago, a ₹10 lakh health insurance plan was deemed adequate. But no longer is it the case. Times have changed, and how! According to industry data, a kidney transplant that cost about ₹5 lakh in 2013 is now more than ₹18 lakh. A heart transplant that cost about ₹9.8 lakh a decade ago, now costs about ₹34 lakh.

In fact, a study of medical cost trends from 2013 to 2025 showed that surgery costs had surged by up to 300% across the board. And it does not include post-operative care or long-term rehabilitation. It is fair to say that this is not a minor spike but a structural shift in healthcare economics. Now, a pertinent question is: Is my health insurance coverage growing at the same pace?

Inflation Vs medical inflation

By the time most of us reach our mid-40s, we have usually ticked all the important financial planning boxes: home loan, term cover and of course, health insurance. This most likely includes a ₹10-15 lakh health policy for the family. But here’s the uncomfortable truth: While healthcare costs have moved on, most of our insurance policies haven’t. The reason is that medical inflation in India outpaces general inflation by a significant margin. Currently, India’s retail inflation is at 3.34%. That is quite low, but on average, it hovers around 5-6%. However, medical inflation in urban India has been about 14% for a while.

It is true that new-age surgical technologies are improving outcomes, but they are also pushing up the cost of medical care. For instance, what used to be a ₹70,000 angioplasty 10 years ago now costs almost ₹2.5 lakh. A routine knee replacement can set you back by ₹5-6 lakh, while cancer treatment costs vary widely. But one thing is certain – they can be financially devastating sans insurance.

The costliest part apart from the surgery itself is diagnostics, pre- and post-hospitalisation, ICU, medication and long-term follow-ups. A ₹10 lakh cover may look adequate on paper, but a single surgery can wipe it out. Health cover that doesn’t scale is not an asset but a liability.

₹1 cr. cover is new ₹10 lakh

With rising healthcare costs, ₹1 crore policies are fast becoming the new benchmark. These days, most insurers offer ₹1 crore health policies at affordable premiums. For instance, a healthy couple in their early 30s can buy a ₹1 crore family-floater policy at a monthly premium starting just ₹2,000-2,500. And these come with comprehensive coverage with no sub-limits or room rent caps. Most policies also come with modern-day benefits like reinstatement of sum insured, daycare procedures cover, and OPD/ mental health consultations in some cases. But the most important thing is the policies, which cost less than what you may spend on weekend dining or streaming services, provide you access to top-tier healthcare services without worrying about the exorbitantly rising medical costs.

Having said that, you must remember that not all ₹1 crore policies are the same. You must look out for some crucial features when purchasing the policy. This is especially true if you or any of your family members to be covered under the policy have any pre-existing disease. In such cases, you must ensure the policy you choose comes with day-one coverage for pre-existing diseases. You must also explore the extent of the cashless hospital network under the policy you are considering. A wider network ensures access to quality care. If you have a preference for any specific hospital, do check if that hospital is part of the network.

One can never take health lightly. Studies have shown that chronic illnesses are on the rise in India. It is estimated that India now sees one in four deaths from cardiovascular diseases. Cancer cases are also rising. And these are not anomalies but patterns. And treating them is becoming more expensive. Most of the ailments require life-saving procedures, the costs of which can mean selling property, liquidating retirement savings or taking on debt. The only alternative is to have a health policy with enough coverage. Make sure your plan is aligned with today’s medical reality.

(The writer is head, health insurance, Policybazaar.com)