Buying Health Insurance? Don’t Ignore this Factor

Have you heard about the term healthcare inflation rate? If not, then this blog is for you.

While buying a health insurance policy, most of us tend to ignore this factor to decide on the right coverage amount. This often results in under-insurance, a situation where your existing health insurance policy fails to meet the medical expenses for even common hospitalisation causes. 

The situation is not desirable for anyone as it leads to financial stress in the event of any emergency medical situation. Therefore, while deciding on the coverage amount, never ignore the medical inflation rate. 

What is Healthcare Inflation Rate?

It refers to the average increase in the cost of healthcare services and medicines over a period. In India, the average healthcare inflation rate is always higher than the headline inflation rate. 

For instance, in the year 2017-18, the average hospitalisation expenses for the age group 80-100 was around ₹33,000, increased from ₹13,000 in 2004. Similarly, the cost of major surgeries has increased significantly in the past decade. 

If you check out the latest healthcare inflation data, Covid-19 has pushed up the cost of healthcare in India. In May and June 2021, the healthcare inflation rate was 8.4% and 7.7%, respectively, higher than retail inflation of 6.26% in June 2021. 

All the sub-sectors of healthcare have witnessed a consistent increase in prices in 2021. For instance, medicine prices have increased 8.6% year-on-year, medical tests (6.2%), hospital charges (5.9%), and consultation fees (4.5%). 

Therefore, while calculating the health insurance coverage amount for yourself and your family, factor in the healthcare inflation rate.


While determining the coverage amount for your health insurance, use the historical healthcare inflation data to calculate the coverage amount that will keep you financially protected in an event of a medical emergency for the next few years. And, always enhance the health insurance coverage amount at regular intervals, preferably every three to five years, as per the current market conditions and inflation rate.