'Indians one hospitalisation away from bankruptcy': Zerodha co-founder Nithin Kamath's observation highlights dire reality

Collage showing a hospital bill and Zerodha founder Nithin Kamath.

Credit: iStock, X/@Nithin0dha

Zerodha co-founder Nithin Kamath recently warned that most Indians were "just one hospitalisation away from bankruptcy" and urged citizens across the country to opt for comprehensive health insurance to avoid such scenarios.

"A good health insurance plan is mandatory," asserted Kamath in a post on social media platform X as he urged Indians to opt for insurers with at least five to ten years of proven track record in service, and with a claim settlement ratio in the range of 80-90 per cent.

Kamath comments come months after he suffered a stroke.

"Around 6 weeks ago, I had a mild stroke out of the blue. Dad passing away, poor sleep, exhaustion, dehydration, and overworking out —any of these could be possible reasons," he had written in February this year, announcing his health setback and road to recovery.

Kamath's comments also assume signifiance, given that medical inflation touched an alarming 14 per cent as per a 2023 report.

Most Indians also spend their own money to get healthcare services, with out of pocket expenditure on healthcare remaining one of the biggest components of total health expenditure in the country.

As per a 2020 release by the Press Information Bureau (PIB), out of pocket expenditure accounted for a whopping 62.6 per cent of total health expenditure in 2014-15, but dipped over the years to hit 47.1 per cent in 2019-20.

Meanwhile, according to the World Health Organisation (WHO), out of pocket expenditure accounted for 49.82 per cent of total health expenditure in India in 2021.

For comparison, out of pocket health expenditure in Pakistan and Bangladesh accounted for 72.99 per cent and 57.5 per cent of their total health expenditures in 2021, respectively, with Armenia having the highest figure in the world, at 78.66 per cent.

While India's numbers are far lower than the global worst, as per 2021 data, out of pocket health expenditure in the country was the 28th highest in the world, far higher than in many, many low-GDP African nations.

For perspective, the lowest out of pocket health expenditure in 2021 was reported in Malta (0 per cent), while figures for high-GDP European nations ranged between 8 and 15 per cent.