• Kenko Desk

Taking Medical Inflation Head On!

Losing your sleep over increased medical expenses? That’s medical inflation. Let's analyse what's yet to come and what needs to be done...



A simple internet search will tell you that India’s annual inflation rate was 7% in August 2022, rising from 4.79% in August 2021. But what exactly does the word “inflation” mean? In simpler terms, inflation occurs when the prices go up, and the purchasing power goes down.


While the definition may sound easy, understanding its implications is important. If you don't know what's happening in the West, you haven't heard the bad news yet. On Wednesday, 21st September 2022, the US stock market saw the worst sell-off since June 2020. Asian markets performed better but financial pundits all over the world are expecting some of the strongest economies to face challenging times ahead.


Have these experts given any solutions yet? Oh yes, but first let's talk about how this inflation affects our daily life, financial goals, and healthcare expenses.


What is inflation?


Inflation is defined as the decrease in the purchasing power of the currency. Let’s look at an example: In 2021, you made 6L, but your overall expenses were 5L. However, in 2022, you made 6.5L, but your overall expenses were 5.6L. This means, you saved more in 2021 despite making more money in 2022. That's what inflation does. So next time you get a raise, compare it with the annual inflation rate and try to negotiate.

What is medical inflation?


Take the same example. What you paid last year for your medicines, doctor consults, lab tests, or any other healthcare product or service was lesser than what you'll pay this year. And for most of us who don't see big hikes our expenses go up and savings go down.


Then why talk about it differently? Because medical inflation is rising faster than the average inflation: In 2021, India’s medical inflation rate stood at 14%, whereas the average inflation rate for India was 5.13%. Thus, medical inflation can have a drastic impact on your financial health and lifestyle. Let’s understand how.

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How does it affect you?

Medical inflation is rising faster than the average national inflation. According to the numbers, if an average non-medical product cost was Rs. 1000 in 2020, its cost increased to Rs. 1051.3 in 2021. However, when it comes to medicine, this number shoots up to Rs. 1140.


Finally, it is true that you don’t always need hospitalisation. Still, when you need it, the expenses usually are in 5-6 figures. A C-section is the most performed surgery in India. And the average cost for this surgery is Rs. 33,000 in a private hospital.


If we go by the medical inflation numbers of 14%, the average price for C-section after 10 years could go up to Rs. 1.22 lakh. And this is assuming that the medical inflation stays at 14% and doesn’t go any higher.

Steps you can take NOW!


When it comes to fighting the effects of inflation, most experts will advise you to avoid unnecessary spends today, save more and invest every month. You should also try to keep your income at par with inflation, hedge your funds, and don't put all your eggs in one basket.


However, when it comes to medical inflation, there are very few ways to fight it. While you may say that one of them is to stay fit and healthy, you are bound to fall ill someday. What you need is a financial plan for medical emergencies (unless you got unlimited supply of cash or own a hospital) . You must keep save 10% of your income every month for personal emergencies.


Another pivotal mantra to tackle medical inflation is to buy a comprehensive healthcare plan. A smart healthcare plan, like the Kenko 999 Family Plan, can save you and your family from the financial burdens of medical emergencies. Get up to 50% discount on medicines, doctor consults, diagnostic tests, and much more. Learn more about our plans here.

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