High cost of health: firms cutting back on medical benefits

The rising cost of medical insurance has prompted a large number of companies to provide reduced health benefits to employees, who are also being increasingly asked to bear a part of the costs.

A 2011-12 employee benefit survey by insurance broker Marsh India says the average premium cost per employee has increased by 36 per cent, to Rs9,300 from Rs6,800 over the last two years in 2008-09.

As a result, the average sum assured under the group medical cover offered by companies has come down by 40 per cent, from Rs500,000 to Rs300,000, over the last two years.

''The increasing costs of medical insurance are forcing employers to make changes to the way they provide this benefit to their employees, with many companies requiring them to contribute to the cost of provision,'' says.

The survey serves as an indirect indictment of healthcare in India, where state-run hospitals and services are abysmal, and private institutions (the only option for those who can afford them) charging an arm and a leg.

Almost two-thirds of the organisations surveyed have already made at least one change to their benefit plan design in the last two years, requiring employees to make a greater contribution to the health benefit schemes.