Health Insurance Or Household Expenses? The Tough Choice Indians Are Facing

Seema Sengupta, a Journalist and Columnist, might not have thought that she would have to give up her health insurance one day due to an ‘unsustainable premium’. For thirty years, she regularly paid her premiums to sustain a policy that would be her safety net for medical needs. But when the renewal notice came this year, she was shocked to see that her health premium had soared to an unsustainable level.

In a post on social media platform X (formerly Twitter), Sengupta called out this unimaginable surge in her health premium which eventually led her to discontinue her medical insurance policy after 30 years.

“Today, India has the highest medical inflation rate (14 per cent) among all Asian countries… Dark days ahead for commoners,” she wrote.

Sengupta’s story is not unique. Many people resonated with the issue of surging health premiums, sharing their own troubles with the same.

A user wrote, “My premium has come out to be a whopping (Rs) 35k this year! insane. Unhealthy premiums for health insurance has made the lives of middle class hell! I'm also planning to follow this suit from next year onwards..”

Earlier this year, Rajiv Matta, a 61-year-old with a good medical record, shared his frustration online: “I am 61 years old. In perfect health. No claim till date. I pay a premium for two years. Last one was in Jan '23. It's renewal time now. The premium has just gone up by 90 per cent.”

Matta and otters like him are asking the same question, i.e., how can the government allow such steep hikes? According to a Local Circles survey, more than half of India’s insured population has faced a premium increase of at least 25 per cent in the past year. The respondents reported premium hikes of 50 per cent or more. Only 15 per cent said their premiums remained unchanged,

For senior citizens, the situation is even worse.

Why Are Premiums Rising So Fast?

Experts point to many factors that drive such a surge in health insurance premiums. One of the biggest culprits is medical inflation which includes rising costs of hospital treatments, diagnostic tests, medication and therapies.

Currently, India has the highest medical inflation at 14 per cent in Asia where even the insurance companies find themselves paying out more in claims than they collect premiums.

“Premiums rise due to factors like age and the insurer’s claim ratio. Unfortunately, these hikes disproportionately affect senior citizens,” explains Shilpa Arora, COO of Insurance Samadhan.

Several factors contribute to rising premiums, such as:

1. Claims v/s Premiums: When claims exceed the premiums, insurance companies need to increase premiums to survive.

2. Increased Coverage: More people getting insured leads to a higher number of claims, pushing up the claim ratio and requiring adjustments in pricing.

3. Medical Inflation: The rising cost of medical treatments each year also contributes to higher premiums.

Beyond insurance, many people are also pointing fingers at the rising cost of healthcare itself. “Premiums are going up because hospitals are charging crazy rates,” wrote one user in reply to Sengupta’s post. “Tests are getting expensive for no reason. Insurance companies are passing the burden onto us, making health insurance unaffordable.”

Others echo the sentiment that the real problem isn’t just insurance, it’s the overall cost of healthcare. Unless medical costs come under control, ordinary citizens will continue to face an impossible choice: paying for health insurance or meeting their daily family expenses.

The Insurance Regulatory and Development Authority (Irdai) issued a circular on January 30, 2025, stating that insurers cannot increase health insurance premiums for senior citizens by more than 10 per cent annually without prior approval. “This should be extended to all age groups,” a user called out.

As Sengupta and countless others have discovered, that choice is becoming harder by the day when it comes to managing healthcare needs with surging premiums in India.