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What you can do to reduce your out-of-pocket-expenditure on healthcare

Out-of-pocket expenditure (OoPE) in India, which accounts for approximately 62% of the country's total healthcare spending, is creating a significant financial burden for patients and their families, according to Chris George, co-founder and CEO of QubeHealth. The majority of urban households in India (82%) are not covered by any health insurance scheme, resulting in 55% of all hospitalisations being financed through household savings and 23% through borrowings. George suggests preventative care, comparison shopping, negotiation, government healthcare facilities and health insurance as ways to minimise OoPE.

What you can do to reduce your out-of-pocket-expenditure on healthcarePremium
What you can do to reduce your out-of-pocket-expenditure on healthcare

The young advertising executive was on his way home from office when he felt a sharp pain in his abdomen. The pain did not subside and the next morning, he had to be admitted to a hospital. After some routine medical tests, the hospital informed him that he would need to undergo a ‘cholecystectomy’, a common procedure that involves removing the gall bladder.

The executive, who did not want to be identified, said he was initially not worried about the expenses that this could entail since he had a Rs5 lakh insurance cover. But, he had not taken certain other things into consideration. First, the hospital where he was admitted said that he had to immediately pay 50,000 towards admission—It informed him that he was not eligible for cashless admission since the hospital was not part of the insurer’s network. He was told that he could get his claims reimbursed from the insurer after he was discharged from the hospital.

His brother paid for the admission charge using a credit card. Post the surgery, the executive was told that he would have to pay 33,350 at the time of his discharge. His total bill had come to 83,350 and he had already paid 50,000 at the time of his admission. The executive, who did not have any savings for such exigencies, had to use his credit card again. When he contacted the insurer, the firm’s third party administrator, or TPA, said he was eligible for a reimbursement of just 42,330. The insurer, he was told, would pay the amount within 30 days of receipt of the claim and submission of all bills and discharge certificate from the hospital. The executive had to thus pay a total of about 41,000 from his own pocket.

This executive’s experience is not unique and perhaps explains the out-of-pocket expenditure, or OoPE, that most insured individuals have to bear during any hospitalization. For the uninitiated, most insurers do not cover expenses pertaining to consumables, such as single use disposable medical aids used during surgeries.

One of the biggest challenges facing the Indian healthcare system is the high OoPE as it imposes a significant financial burden on the patients’ families. They may have to borrow money (credit cards, personal loans) or even sell assets (mutual funds, PF, gold) to pay for medical expenses. While people with higher incomes can afford to pay for expensive medical treatments, those with lower incomes must forgo medical care or rely on substandard services. This can create a vicious cycle of poor health outcomes and limited economic opportunities. Also, many people may delay seeking treatment until their condition worsens, leading to higher healthcare costs and poorer health outcomes.

OoPE in India has been pegged at around 62% of the total healthcare expenditure . Indian families spent an average of 7.9% of their entire annual household consumption expenditure (monthly running expenses for your home) on healthcare .

A lot of this is also because, 82% of urban households in India are not covered under any health insurance scheme , resulting in 55% of all hospitalizations being financed through household savings and 23% through borrowings.

Here are some ways to minimize OoPE:

Health Insurance: It is one of the most effective ways to minimize OoPE. Buy as much insurance cover you can afford to.

Healthcare credit line: Avail a no-cost healthcare credit line, that gives you quick and easy access to money, which you can borrow and pay back at no-cost, covering any cost paid for by your health insurance .

Preventive care: Regular check-ups, vaccinations and screening tests can help you detect health problems early and prevent them from becoming more severe and expensive to treat.

Comparison shopping: Compare the prices of different healthcare providers to find the most affordable option for your medical needs.

Negotiation: Try to negotiate with the healthcare provider for a lower price. Many providers are willing to offer a discount if you pay in cash or upfront.

Government healthcare facilities: These offer medical services at subsidized rates or for free. While the quality of care may vary, these facilities can be a cost-effective option, especially for routine check-ups and minor illnesses.

Chris George is co-founder & CEO, QubeHealth

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Updated: 11 May 2023, 11:34 PM IST
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