India spends 90% of its healthcare costs from its own pockets. What nearly you?

India spends 90% of its healthcare costs from its own pockets. What nearly you?

‘Health is wealth’ and so we are told but when it comes to maintaining it, we are none the wiser. Given the modern lifestyle and pollution, our health suffers the most. According to the Global Burden of Disease Study conducted by The Lancet, India ranks 154th amidst a list of 195 countries in healthcare index. This index depicts the capability of a country to face diseases and prevent death. Such a low position shows that Indians succumb to various diseases and ailments because of lack of awareness. It shows that India is not completely prepared to tackle diseases and so has a high death rate. Coupled with the high incidence of ailments, India’s out-of-pocket expenses on healthcare is very high. Indians spend a major proportion of their healthcare costs from their own pockets. As per WHO’s report for the year 2014, the out-of-pocket expenditure as a percentage of private expenditure on health in India is a whopping 89.2%. Surprising, isn’t it?
There are about two dozen insurance companies in India offering more than 50 health insurance products. These health plans help individuals deal with the financial implications of an ailment. Yet, the out-of-pocket expenses on health care are high. Have you ever wondered why?
The reason is that the penetration of health insurance is low. Though illnesses have become frequent, very few people invest in a health insurance plan. Here are the reasons why –

Lack of awareness

The primary reason for not investing in a health insurance plan is a lack of awareness. Many individuals don’t understand the need and benefit of a health insurance policy. Their savings are directed to more lucrative investment avenues which bring in returns. As a result, health insurance is always given a miss.  But, the rising cost of treatments and high incidence of ailments together take a toll on your savings. You either don’t have enough money to pay for your healthcare costs or you deplete your available savings and face a financial crisis.

Burden of premium payments

Another major reason, besides lack of awareness, is the premium payable. Health insurance plans require policyholders to pay premiums to avail coverage benefits. Since these premiums do not earn returns, they are considered to be a burden by many. People do not like paying health insurance premiums and abstain from a health insurance plan.

Lack of trust at the time of claim

Health insurance claims specify a certain set of rules. You have to follow these rules to get your claim settled quickly and easily. These rules are considered technical by many. Policyholders do not read the fine print of their policies. They don’t find out the claim settlement process and make mistakes when raising a claim. As a result, their claim settlement process is jeopardized. They blame the company for any hassle and lose trust on health insurance as a product.

Affordability

People have the notion that health insurance premiums are high and they cannot afford them. They do not like parting with a few thousand rupees to get health insurance coverage. Even when they do buy a health plan the sum insured chosen is very low in fear of the high incidence of premium and non-affordability.

What can be done?

While it is true that health insurance penetration is low, all in not lost. Through some efforts, the penetration can be increased. Insurance companies and even the regulator are devising ways to increase such penetration.

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