The increase in medical costs globally is driving the market for health insurance. Moreover, the rapid growth of chronic diseases among the population across the globe such as heart disease, cancer, type 2 diabetes, and arthritis, and the rise in the aging population, has further contributed to the expansion of the market. However, the cost associated with health insurance may act as a market constraint.
The increase in healthcare expenses is the prime driver of the market, found the report. Healthcare insurance acts as a risk mitigation measure for consumers and governments around the world, and the increase in health expenditure both by the individuals and governments is rising.
Global expenditure on health has increased
According to the report on global health expenditure released by the World Health Organization in February 2019, global expenditure on health increased in low and middle-income countries by six per cent and in high-income countries by four per cent.
The Indian Government is looking to increase public spending on healthcare services from one per cent to 2.5-3 per cent of GDP, as envisaged in the National Health Policy of the country. The US Center for Medicare and Medicaid Services in its report estimated that national healthcare spending reached $3.81 trillion in 2019 and increased to $4.01 trillion in 2020.
The report projects that by 2028, healthcare spending would reach $6.19 trillion, and would account for 19.7 per cent of GDP, up from 17.7 per cent in 2018 in the US. The increasing healthcare expenditures point to the opportunity in the health insurance market.