First of all, what is health insurance?

Health insurance is a type of agreement signed between you and an insurance company. With this agreement, the insurance company is legally bound to cover all your medical expenses whenever you fall sick due to medical conditions including road traffic accidents that lead to hospitalization.

Now if we do a survey, it is sure that 99% of the people will be aware of health insurance and its purpose. Still, it is shocking that in India most of the people are not covered with health insurance and even those who are covered with health insurance are not adequately covered.

As per the data given by Statista,

In FY 2018, the penetration level of health insurance in India is around 35%. Now, out of the 35% of people in India covered with health insurance, most of the people are not adequately covered. A large number of citizens gets treatment from private care providers. Out of the total healthcare expenditure in FY 2016, 64% of expenses are out of pocket expenses. That means, out of 100 people 64 people are spending money from their own pocket which is a huge number.

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Now let us get into the main topic,

What is the importance of Health Insurance for you?

For you to understand the importance of health insurance, first you should know the basic of this topic and that is the healthcare expenditure prevailing in India. Now below given is a table that gives the details of some of the major medical expenditures that you may incur in your life at least once. Even though chances are not very high, it is not very less either. For some of the major procedures mentioned below, I have given the lower range and upper range of expenses. And these are the prevailing rates in the year 2021.

Healthcare Expense in India

Procedure	Cost Lower Range in India (INR)	Cost Upper Range in India (INR)
Coronary Angiogram	19844	79375
Angioplasty (one stent)	238125	515938
Bypass Surgery (CABG -coronary artery bypass graft)	238125	754063
Congenital heart defects – ASD/VSD Closure	238125	793750
Heart transplant	1825625	3175000
Permanent Pacemaker Implant (Single Chamber) – with device	198438	357188
Liver transplant	3175000	4445000
Kidney transplant	396875	1746250
Bone marrow transplant: allogenic	2301875	2619375
Bone marrow transplant: autologous	1270000	2222500
Lung transplant	1746250	1984375
Heart transplant	1825625	3175000
Knee Replacement (Single) – with implants	277813	674688
Knee Replacement (Double) – with implants	476250	1150938
Hip Replacement (Single) – with implant	476250	793750
Hip Replacement (Double) – with implants	635000	1166813
Chemotherapy (per cycle)	79375	238125
PET-CT Scan	23813	35719
Breast Cancer Surgery	238125	531813
Prostrate Cancer Surgery	436563	793750
Cataract surgery with lens	63500	158750
Glaucoma	47625	158750
Appendectomy-Laparoscopic	95250	222250
Nephrectomy (removal of kidney)	119063	158750
Colonoscopy	11906	27781
Endoscopy	47625	158750

It is clear that none of the expenses given above is small and for some procedures, for example, chemotherapy, you may have to do it many times to complete the treatment. Now that is not all.

You need to consider the healthcare inflation rate in India. According to this article the healthcare inflation rate in India is around 7% to 8%.

So how 8% inflation will affect the healthcare expense? Let us see how the healthcare expenditure will look like after 30 years. Below given is the same procedure which I mentioned in the above table with 8% inflated expenses after 30 years.

Procedure	2050 – Cost Lower Range in India (INR)	2050 – Cost Upper Range in India (INR)
Coronary Angiogram	199683	798723
Angioplasty (one stent)	2396170	5191707
Bypass Surgery (CABG -coronary artery bypass graft)	2396170	7587877
Congenital heart defects – ASD/VSD Closure	2396170	7987234
Heart transplant	18370638	31948936
Permanent Pacemaker Implant (Single Chamber) – with device	1996814	3594260
Liver transplant	31948936	44728510
Kidney transplant	3993617	17571915
Bone marrow transplant: allogenic	23162978	26357872
Bone marrow transplant: autologous	12779574	22364255
Lung transplant	17571915	19968085
Heart transplant	18370638	31948936
Knee Replacement (Single) – with implants	2795537	6789154
Knee Replacement (Double) – with implants	4792340	11581494
Hip Replacement (Single) – with implant	4792340	7987234
Hip Replacement (Double) – with implants	6389787	11741239
Chemotherapy (per cycle)	798723	2396170
PET-CT Scan	239622	359428
Breast Cancer Surgery	2396170	5351452
Prostrate Cancer Surgery	4392984	7987234
Cataract surgery with lens	638979	1597447
Glaucoma	479234	1597447
Appendectomy-Laparoscopic	958468	2236425
Nephrectomy (removal of kidney)	1198090	1597447
Colonoscopy	119806	279551
Endoscopy	479234	1597447

Below given is the comparison of the upper range of expenses between 2020 and 2050 (after considering 8% inflation)

Now you yourself look at these numbers and tell me how you are gonna pay your medical expenses in the coming future? Except very few who are damn rich, all others are gonna have a miserable future considering the sure-shot medical expense that is gonna come at least once in their lifetime.

Peculiar nature of healthcare expenses

First, let us compare the way we spend on healthcare with other expenses. Please bear with me for one minute to prove the point I am trying to explain here.

Education expense – You want to send your kid for higher education, you know the best colleges in India or abroad and you know that sending him to the best college will give him a bright future, but if you can’t afford the estimated expenses, then you will purposefully downgrade your dreams and child future to a more affordable college.

Your dream house – You want to buy to dream house with all facilities and amenities. Your family members also have their or demands while making your dream home. But when you realized that you cannot meet your dream home exactly the way you and your family wants, you will start compromising on things here and there to make sure that the total expense of building your house will fall within your budget.

Now let us consider healthcare expense – Your kid or your dearest family members fell sick. You took him for consultation and your doctor says that your kid is suffering from kidney failure and he explains all the medical reasons for this. Now he suggests doing a kidney transplant. As he suggested to wait till we get an appropriate kidney donor, he asked you to make arrangement for the medical expenses and he informed you that the estimated expense for your kid’s medical treatment is Rs. 17 Lakhs. Also, he reminded me that the medicine and consumable expenses are not considered in this Rs. 17 Lakhs which you have to pay separately. No need to mention that the expenses like loss of salary as you take a long leave, travel and other expenses also should be counted before making a decision. Now just like the decision, you took while making your dream house or sending your kid for higher education, will you decide to take treatment from an affordable hospital even though the hospital is not well known for this treatment and the doctor is not having enough expertise in his field? No right? You will always try to give the best treatment for your kid that too even if you can’t afford it. You will be ready to take an unsecured loan from where ever possible and you will try to treat your kind. Right? Now your kid might get treatment and get back to a normal life, but all these processes will put you in deep financial trouble which will seriously impact the quality of your life.

You will get a loan for everything else, not for medical expense and retirement

Yes, the heading says it all. Whatever you want in life, you can take a loan for that. Be it a home, car, education expense. For anything bank will pay you a loan. But in case of medical expense and also for retirement, you have to take money from your own pocket. At least in case of retirement, it won’t come all of a sudden, but in medical expense, it knocks on the door without prior intimation and waiting for someone to help you by offering a hefty amount for you and your dear ones medical expenditure is not gonna be a wise decision.

Your medical expenses are not always your personal decision

As I mentioned above whether it is a decision for your kid’s education, your dream home, your vacation, buying a car or even buying a property, everything is based on your decision especially when you are paying the money. But when it comes to your medical expenditure, especially if it is a medical emergency where prior planning was not possible, especially when you are not medically fit to take a call, it will be your family that makes the decision of your medical expenditure.

Now the tricky part comes here when you are seriously ill and when the decision to make goes to your family, the chance is high that the decision will be taken using their heart more than their brain. What I mean here is, during a medical emergency for you, your family will make an emotional decision to give you the best treatment from the best hospital from the best doctor instead of using their brain to calculate too much about your financial position, potential expenses and future financial trouble that you might go through. Usually, on these occasions, the normal thought will be like this “Let us give him/her the best possible treatment, we will think about money later on”.

Now chances are 50-50. 50% chance is that you survived and came back to a normal-like. There is a 50% chance that you didn’t survive and you go away from life putting all the financial burden on your family’s shoulder. Now, what if even you come back to your normal life? Definitely, you will be bound to clear all the financial trouble that caused to your family due to your illness. Yes, getting sick or falling ill is no one mistake, but still, emotionally you will have the liability to clear all the payments that your near family members have made for you.

Many of the time your negligence will impact the financial health of your spouse and children

Not having health insurance will not only put yourself in trouble, but your negligence in avoiding health insurance will put your family members also in trouble. Suppose after spending a lot of money and even after going through the treatment, you didn’t make it through and you passed away. You are literally putting all the burden on your family on managing the healthcare expenditures made for your treatment and related financial troubles.

Now suppose that you survived and completed the treatment but for some reason, you are no longer a breadwinner for the family, again it becomes a headache for your family members to cover the medical expenses incurred and to clear all your expenditures as they cannot rely on you on anything as you are no longer medically fit to do a job that you know.