What is Health Insurance?
Benefits of Health Insurance – An insurance policy that covers medical costs is referred to as having “health insurance.” It is used more broadly to refer to coverage for long-term nursing, custodial care, and disability needs. In other words, if you have health insurance, you pay a premium to an insurance company each year, and if you get into an accident or need surgery or an operation, the insurance company will cover the costs.
We only need to visit a hospital once to understand how helpless we are. No matter your gender, age, or financial status, being hospitalized due to a diagnosis of disease is a difficult experience. Heart issues, diabetes, stroke, kidney failure, and some malignancies are just a few of the lifestyle diseases that seem to be on the rise right now. Thankfully, there are more specialized hospitals and specialists, but all of it comes at a price.
The extremely wealthy can afford these prices, but what about the typical middle class person? Costs for a condition that necessitates hospitalization or surgery might quickly reach five figures. Such costs can be covered by a health insurance policy. Terms like co-payments, deductibles, and co-insurance are common in health insurance programmes. Examining these terms’ definitions will help. With the exception of preventative services, a policyholder must first pay a deductible before the insurance plan begins to pay benefits.
She will make a copayment or coinsurance payment for covered services after paying the deductible. The rest is covered by the insurer. Plan deductibles are typically higher for those with lower monthly premiums. Lower or even no deductibles may be offered by a plan with a higher monthly cost.
Types of Health Insurance:
These are mainly of three types.
>Individual Mediclaim cover
Individual Mediclaim coverage is the most basic type of health-insurance. Up to the sum assured limit, it will cover a person’s hospitalization costs. The amount insured determines the premium. It is a cover that covers medical costs after hospitalisation or in-home hospitalization of the insured in the event of an accident, illness, or emergency medical need for surgery related to a disease that developed during the policy period.
This insurance is a hospitalization plan that pays for the medical costs related to a covered illness or surgery that occurred while the insured was an inpatient at the hospital. The coverage includes both pre- and post-hospitalization for duration of 30 and 60 days, respectively.
>Family floater policy
An improved mediclaim insurance is the family floater policy. All members of the family are protected by the policy, and expenses for the entire family are covered up to the maximum sum promised. The premium for the family floater plan is less expensive than the cost of each family member’s own insurance policy.
>Unit linked health plans
Unit Linked Health Plans are a new product from health insurance companies that mix health-insurance with investment and pay back money at the conclusion of the policy period. The returns depend on how the market does. These plans are brand-new and still in the planning stages. This plan should only be chosen by those who are capable of managing market-linked products like ULIPs and ULPP. Unit-linked health insurance should be avoided for a variety of reasons. Just think of insurance as a cost. Choose a Family Floater policy if you have family and an Individual Mediclaim coverage if you are single. Section 80D of the tax code exempts up to Rs. 15,000 in health-insurance premiums from taxation.
Analysis of its Mechanism:
In the event of a serious illness or accident, health-insurance offers financial support. A new financial plague has emerged globally as a result of rising hospital and surgery prices. The cost of medical services includes, among other things, the price of diagnostic tests, hospital stays, doctor visits, and surgeries. Therefore, this rise in the price of medical services fuels the market’s expansion.
Employees in both the public and private sectors are required to purchase health-insurance. While working for a corporation, a person may take advantage of important medical advantages provided by health-insurance. The health-insurance coverage is very helpful in covering the cost of medical care in the event of an emergency or other medical problems. The employee’s health-insurance is an added advantage that each firm offers to their staff members. The employee and their family are both covered by the health-insurance offered under the same policy plan. Additionally, in some circumstances, the employer may contribute to the cost of the health-insurance policy’s premiums or insurance coverage.
>ADVANTAGES
The policyholder of a health-insurance plan is reimbursed by the insurer for any medical costs associated with an injury, including hospitalization, surgeries, and therapies. The insurance company guarantees reimbursement for treatment costs in the event of future medical concerns, and the policyholder agrees to pay the premium amount in accordance with the insurance plan, under the terms of a health-insurance policy. The benefits of health-insurance policies thereby improve the market for health insurance worldwide’s growth prospects.
The global rate of increase in health spending is accelerating. The World Health Organisation (WHO) research indicates that the growth of global health spending is upward-trending. In the last two decades, the amount spent on health worldwide more than doubled, reaching USD 8.5 trillion in 2019—or 9.8% of the world’s GDP. The distribution was unequal, with high-income nations making up about 80% of global health expenditures. Out-of-pocket spending (OOPS; 44 percent) and foreign aid (29 percent) provided the majority of the funding for health care in low-income countries, whereas government spending accounted for the majority of costs in high-income nations (70 percent ).
Accordingly, it is anticipated that the rising costs of healthcare will present a market opportunity for health insurance worldwide. The COVID-19 pandemic is seen as a key driver driving the expansion of the global health-insurance market because of the rise in cases of various diseases, including cancer, dengue fever, and diabetes. Improvements in claim handling services and a rise in the popularity of health insurance among rural residents are other key drivers of market expansion.
The market opportunity for health insurance is, however, constrained by a number of problems, including a lack of awareness about the coverages offered by health insurance policies and an increase in the price of health insurance premiums. The cost of medical treatment is also anticipated to climb as healthcare professionals use more cutting-edge technologies to address chronic ailments like cancer and cardiovascular conditions. Customers can no longer afford these hefty treatment expenses.
>DISADVANTAGES
Costs of all medical treatments are covered by health insurance. Since it pays for all medical costs incurred while the policyholder is receiving treatment in a hospital, it offers the policyholder financial support. The costs of both admission and discharge are covered by health insurance. The insurance premiums must be paid on time each month to maintain the health insurance policy in effect after the policyholder purchases it. The majority of the time, depending on the insurance plan, the cost of the insurance premium is expensive, which is limiting the market’s expansion.
Due to the rise in healthcare costs—including the price of medications, hospital admission fees, and the cost of numerous medical treatments—companies that offer health insurance have raised the insurance premium cost. In addition, the majority of customers around the world have one or more chronic illnesses, such as diabetes, Alzheimer’s, or heart disease. To treat these chronic disorders, medical practitioners have imposed high costs. Since high claim settlement costs impede market expansion, insurance companies must solve this issue.
Impact of Covid-19
All people and businesses worldwide have been harmed by the COVID-19 outbreak. Due to the expanding coronavirus outbreak, clients now feel a greater need to get health insurance in order to access better healthcare services and medical facilities. In addition, the COVID-19 outbreak is causing a sharp increase in hospital admissions. As a result, claims for health insurance have dramatically grown. Additionally, the global expansion of this health issue is a significant factor in the rise in health insurance premiums as a result of the tremendous pressure it has placed on the market’s insurance providers.
In 2020–2021, COVID-19 had an effect on a number of manufacturing and service-related industries as it resulted in workplace closures, supply chain disruptions, and transit limitations. However, the disparity between supply and demand and its effect on pricing are only temporary and are anticipated to improve once the pandemic ends.
The need for health insurance has skyrocketed as a result of the global covid19 pandemic. Additionally, the health insurance industry expanded during the pandemic due to the dread of the disease and the rising expense of medical care. Additionally, health insurance providers established plans and methods to pay for the medical expenses associated with treating covid19-infected insurers. As a result, during the Covid19 pandemic, health insurance suffered less than other industries.
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