The Hidden Financial Burden Of Healthcare Beyond Hospital Bills

Many Indians, when they think of health insurance, associate it primarily or wholly with the cost of hospitalisation. While this protection is essential, it represents only one part of the financial impact of illness. 

According to the National Health Accounts 2022-23 report, Indians spent more than Rs 1.6 lakh crore on medicines alone during the year, making pharmaceuticals one of the largest component of healthcare expenditure. The figure is a reminder that a substantial share of healthcare spending takes place outside the hospital and often continues well after discharge. A medical episode often creates a chain of expenses.

Consultations and diagnostic tests may be required before admission while recovery often involve medicines, follow-up consultations, physiotherapy, rehabilitation or care at home. For individuals living with chronic conditions such as diabetes, hypertension, cancer or heart disease may also face regular expenditure on treatment and monitoring over many years.

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Health insurance can help address several of these expenses, but the extend of coverage varies across products. Many hospitalisation policies cover eligible pre- and post-hospitalisation medical expenses for specified periods when they relate to an admissible hospitalisation claim. Other benefits, including outpatient consultations, home healthcare or defined day-care procedures, may be available under particular policies or optional covers. Consumers should therefore avoid assuming that every expense is either automatically covered or universally excluded. 

Less Visible Costs of Illness

The financial impact of the illness often extends well beyond medical bills. Treatment may require travelling to another city, resulting in additional expenditure on transport, accommodation and food for both patients and caregivers. During recovery, families may also need to arrange for home-based care or engage a caregiver. If the patient is an earning member, illness may temporarily disrupt household income, while another family member may need to reduce working hours to provide support. 

These expenses can be particularly difficult for low- and middle-income households. Even when a major part of the hospital bill is paid by insurance. Deductibles, co-payments, non-payable items and costs outside the policy may have to be met from savings. Families without an adequate financial buffer may be compelled to borrow or postpone other important financial goals. 

The answer, however, is not simply to select a policy containing the maximum number of benefits. Wider coverage can come at a higher premium, and not every household has the same needs. A young family, a senior citizen and a person managing a chronic condition will require different forms of protection. 

Building Complete Healthcare Safety Net 

The first step is to ensure that the core hospitalisation cover is adequate. Consumers should review the sum insured, waiting periods, co-payment requirements, deductibles, room eligibility, sub-limits and relevant exclusions. They should also understand the conditions applying to pre- and post-hospitalisation expenses, day-care treatment and home-based care. 

The second step is to consider recurring healthcare needs. Where outpatient consultations, medicines or other services form a significant part of household expenditure, consumers can examine whether suitable benefits are available and affordable. Product terms vary, and the Customer Information Sheet and policy wording should be read carefully. 

The third step is to maintain an emergency fund. Insurance is designed to protect against defined risks under a contract. It normally may not compensate for every non-medical expense or interruption of income. Check if the policy offers hospital-cash — an option where for every hospitalization day, a certain amount of money is paid to the customer, that may be used for the function of the family. 

Insurers and intermediaries also have a responsibility to explain both benefits and limitations clearly. Consumers, in turn, should review their protection periodically rather than waiting for a medical emergency. Changes in age, family composition, health conditions and treatment costs can affect whether existing cover remains appropriate. 

The hospital bill may be the most visible cost of illness, but it is rarely the only one. Better financial preparedness begins with understanding the entire journey from diagnosis and treatment to recovery and long-term care and then combining suitable insurance with adequate savings.

The article has been authored by Anand Roy is the managing director and CEO of Star Health & Allied Insurance, and a member of the executive committee, General Insurance Council.

Disclaimer: The views expressed in this article are solely those of the author and do not necessarily reflect the opinion of NDTV Profit or its affiliates. Readers are advised to conduct their own research or consult a qualified professional before making any investment or business decisions. NDTV Profit does not guarantee the accuracy, completeness, or reliability of the information presented in this article.

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