What Are The Reasons For The Increase In Medical Expenses In India?
What Are The Reasons For The Increase In Medical Expenses In India?
Posted On : 11 February 2021, 8 Months Ago. Health-Insurance
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The Indian healthcare industry has received acclaim for its commendable display of expertise in managing a full-fledged pandemic. The industry is making substantial progress in research and providing world class treatment options for chronic ailments, which also draws around 5 lakh people every year to seek treatment in our country from abroad. However, as the quality of healthcare being offered is on the rise, so are the costs associated with it. This is especially visible in the private sector where a report tells us that the average claim of COVID-19 patients is over Rs 43,000 per day.[1]


Why are healthcare costs so high in India?


There are multiple reasons for rising costs of healthcare in India. Let us have a look at them:


1) Medical Tourism


More and more tourists visit India to seek healthcare for several serious ailments such as cancer and organ transplant. This in turn has led to a stressed demand for critical illness services, which ends up increasing the cost of healthcare. The paucity of world class yet affordable treatment options available in other nearby countries has set India’s medical tourism industry in route to touch USD 9 Billion by the end of the fiscal year.


2) Research and Development 


A major reason for the rise in medical expenses in India is that a lot of money goes into developing novel treatment options for people suffering from life-threatening ailments. Devising state-of -the-art drugs and treatment methods for illnesses such as cancer, transplants, etc. also concurrently increases the price. Much of the equipment used in major hospitals these days is imported from other foreign countries, which contributes a hefty rise in medical expenses.


3) Medical Inflation


The most primary reason for the rise in medical expenses in India is the inflation being witnessed in the healthcare industry. It is estimated that medical inflation stands at around 15% at present and is much higher than the overall rate of inflation, which stands at around 6-7%. This soaring cost of medical inflation is attributed to the rising costs of raw material, and the overall cost of medicines in general. Even other costs such as freight charges, warehouse charges, etc. have increased as the medical paraphernalia often demands certain storage and transportation requirements. This has led to a dramatic overall inflation in the medical industry.


4) Polarization of income


As the gap between the income of the rich and the poor widens, healthcare remains to be one aspect where the rich are willing to splurge as much money required and ensure the best possible treatment for their loved ones and themselves. The private conglomerates who are profiting off this aspect are unwilling to cut their prices and reduce costs. Even the medical tourists from abroad often take advantage of their stronger currency and spend injudiciously on healthcare, which has directly resulted in a drastic rise of medical expenses in India.


5) The Pandemic


The pandemic was a turnaround point for the healthcare industry who worked night and day to deal with the virus effectively. This was also a time when imports of raw materials were disrupted due to trade halt when they were needed the most. There was also a huge rise in the demand for frontline workers and advanced medical equipment such as ventilators in our country. To meet this demand, we witnessed a significant rise in hospitalisation expenses.




To mitigate the effects of rising healthcare costs, it is advised that every individual must have adequate health care insurance to protect themselves in times of despair. This will not only help reduce the monetary shock, which is often faced by people when they fall ill, but also make you feel more secure about your future.




1. https://timesofindia.indiatimes.com/india/insurers-get-big-claims-say-private-hospitals-overcharging/articleshow/75056685.cms

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