Rising Medical Inflation Calls for a Smarter, Sustainable Group Insurance Model

Introduction

You have probably noticed how healthcare has become a lot more expensive in the past few years. Whether it is medicines, doctor visits, tests or treatments, the costs keep rising. This is called medical inflation, and it affects all of us. Even if you have health insurance, traditional plans may no longer fully cover what you need. That’s why smarter and more sustainable group health insurance options are becoming essential.

Understanding Medical Inflation and Its Ripple Effects

Medical inflation refers to the rise in the cost of healthcare services. This includes the cost of medicines, tests, doctors’ fees and hospital stays. In some cases, even the type of treatment or procedure is considered part of it. Thus, medical inflation leads to higher medical expenses as well as an increase in health insurance claims.

The following are the causes of medical inflation:

●       Growing demand for healthcare

●       Advanced medical technology

●       Growing cases of lifestyle diseases

●       Higher hospital bills

●       Rising costs of medicines and medical supplies

When medical costs go up, it doesn’t just affect hospital bills but also other things. This is called the ripple effect of medical inflation. Here’s how it affects everyone involved:

●       Higher health insurance costs: As medical expenses rise, insurance companies have to pay more for treatments. This pushes them to increase policy premiums to keep up with rising expenses.

●       Impact on senior citizens and patients with pre-existing conditions: People who are older or have existing health issues need more medical care. Therefore, their insurance premiums are higher than others.

●       More insurance claims: As healthcare costs rise, more people rely on health insurance to pay their medical bills. This increases the number of insurance claims, putting extra financial pressure on insurance companies.

●       Delayed healthcare: Many people delay or skip medical care because the costs have become too high. This can cause more serious health problems later.

●       Pressure on employers: Medical inflation makes it costlier for companies to provide group health insurance to their employees. They must either spend more on health coverage or cut back on the benefits they provide.

Why Traditional Health Insurance May Fall Short?

Traditional health insurance plans usually come with fixed coverage limits and may not be enough to handle today’s high medical bills. As the cost of treatments, medicines and hospital stays keeps rising, these plans may not cover everything. When that happens, employees or employers have to pay the remaining amount from their pocket.

What is the Group Insurance Model?

Group insurance is a type of plan that covers a group of people under one policy, usually employees of a company or members of an organisation. Instead of each person buying their own insurance, the company buys a single policy that covers everyone. It is usually more affordable because the cost is shared between the employer and the employees, and the risk is spread across many people.

For example, if a company has 200 employees, it can purchase one group health insurance plan that covers all of them. This helps both the company and employees by making things simpler, and it usually offers better coverage for less premiums than individual plans.

Key Features of Group Insurance Models

The following are the key features of group insurance models:

1. Same coverage for everyone: Everyone in the group gets the same insurance benefits, irrespective of their age, job role, or background.

2. Lower premium costs: Group insurance is usually cheaper than buying individual plans.

3. Easier to manage: Since the policy offers the same coverage for everyone in the group, it is easier to manage. It also helps keep things fair for everyone.

4. Coverage for family members: Many group plans also cover family members like spouses, children or even dependent parents. This is usually more affordable than buying separate health insurance plans for family members.

5. Company handles the process: The company or group leader usually buys the policy and takes care of things like paperwork and premium payments. This makes it more convenient for the people covered.

6. Ongoing coverage: As long as the employee continues working with the company or the individual remains part of the group, their group insurance policy stays active.

7. No health tests needed: Pre-policy medical check-ups are usually not required for group health plans. People with existing health problems can often join without any extra checks.

8. Easy sign-up process: Joining a group health plan is usually quick and simple. Employees just have to fill out a basic form.

Types of Group Insurance Models and How They Meet Different Requirements

Here are the different types of group insurance plans:

1. Group Health Insurance

This is the most common type of group insurance. It helps cover medical expenses like hospital stays, doctor visits, medicines and sometimes regular health check-ups.

2. Group Life Insurance

This plan provides life insurance to all group members. If an employee passes away, their family gets a lump sum amount to support them during such a challenging time.

3. Group Personal Accident Insurance

This covers accidents that happen at work or outside. It includes benefits for accidental death, serious injuries, or permanent disability.

4. Group Disability Insurance

This plan gives financial support if an employee becomes disabled and can't work. The coverage can last for a few months or even until retirement.

5. Group Travel Insurance

This protects employees while they travel for work or even vacation. It covers travel-related issues, such as medical emergencies, cancelled trips, or lost luggage.

6. Group Critical Illness Insurance

This gives a lump sum payout if an employee is diagnosed with a serious illness like cancer, heart disease, kidney disease, heart attack, or stroke. The amount can help cover treatment costs as well as other expenses during recovery.

Conclusion

With medical costs going up fast, traditional group insurance plans might not be enough anymore. To keep employees healthy and make insurance easier on the pocket, companies and insurers need to turn to smarter, more sustainable group insurance options. These newer plans should be flexible, affordable, and focused on real healthcare needs, helping both employers and employees manage the impact of medical inflation.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

Disclaimer: This article is published in association with HDFC Ergo and not created by TNM Editorial.