Rising Health Coverage, Yet Critical Illness Gap Grows in India
A report says the financial protection gap for critical illnesses is widening despite increased employer coverage and preventive care efforts.
The financial protection gap for critical illnesses is continuing to widen despite employers and insurers increasing focus on preventive care and cost-sharing measures to help workers and families manage rising treatment expenses, a report said on Monday on the eve of World Health Day.
The professional services firm Aon said that employers in India are increasingly investing in preventive care, outpatient benefits, and digital health and wellness solutions, reflecting a broader shift toward proactive health management due to this gap.
"Employers are increasingly recalibrating plan structures, introducing cost-sharing mechanisms such as voluntary top-ups, co-pay models, and employee-funded riders," the report said.
The firm highlighted that India’s protection gap is high when compared to peers globally, creating significant opportunities for growth in the insurance industry.
While employer-provided health insurance is widespread, it is typically focused on inpatient care, with average coverage levels of Rs 3–5 lakh. Critical illness riders, where available, tend to be limited to Rs 5–10 lakh amounts that are often inadequate for serious health events involving prolonged treatment and recovery.
The report flagged a widening gap between the true cost of critical illnesses and the financial protection available to individuals and families.
The critical illness protection gap refers to the shortfall between the actual financial burden of a serious illness and the support available through insurance, employer benefits, and personal savings.
Globally, the gap is widening, particularly in high-growth regions such as Asia Pacific, the Middle East and Africa, and Latin America, where medical inflation continues to outpace wage growth and benefit expansion.
Healthcare inflation in India — estimated at around 11.5 per cent — poses a challenge for employer-sponsored health plans in providing adequate coverage.
The report called for a more holistic approach that combines insurance design, employer benefits, and individual financial planning to effectively bridge the gap.
With Inputs From IANS