Out of Pocket Expenses in Health Insurance

According to the WHO (World Health Organization), Indians pay nearly 60% of total health expenditure from their own pockets. This tells you how underprepared we are when it comes to facingmedical contingencies.

According to WHO's Health Statistics 2012, India comes third in the list of countries – with the highest out of pocket expenditure (OPE) on health – in south-east Asia.

The statistics concluded, based on 2009 data, nearly 60% of the total health expenditure in the country was paid by Indians out of their own pockets. What this means effectively is – out of every Rs 100 spent on illnesses, injuries, medical contingencies in 2009, as much as Rs 60 came out of the individual’s personal funds. The rest was presumably financed through a healthcare policy.

While the statistics are dated, they go to show that Indians are grossly uninsured when it comes to healthcare. Even Pakistan is ahead with 41% of funding towards healthcare coming from out of pocket.

Also ahead are Nepal (49%), Sri Lanka (44%), Indonesia (41%(, Maldives (28%), Thailand (15%) and Bhutan (13%).

Myanmar fares worst (82%) followed by Bangladesh (65%) in the south-east Asian region.

Given better awareness levels, citizens of developed economies do not spend as much on healthcare from their own pockets. That explains why most of these countries do not even spend 20% on healthcare - Netherlands (6%), Monaco (7%), the United Kingdom (10%), Ireland (12%), Denmark and Germany (13%), Norway (15%), Sweden (17%) and Italy (20%).

According to earlier estimates by WHO, over 3% of Indians would fall below the poverty line because of high medical bills. The severity of the situation is evident from the fact that nearly 70% of Indians could be spending their entire income on healthcare and medication.

Need for healthcare

If there was anything needed to infuse a deeper sense of urgency regarding healthcare insurance, these statistics make a perfect case. If Indians want to lower out of pocket expenditure on healthcare, the only way to achieve this would be to buy health insurance. By taking health plans, they put themselves in charge of their finances when it comes to tackling medical contingencies. Sure a health plan does not cover all types of illnesses/diseases but these are few and even then it would certainly serve to lower the burden on the individual’s finances to a large extent.

Individuals are recommended to consult their financial planners, calculate health insurance premium and select health plans that offer adequate cover against a broad range of illnesses and medical conditions.

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