The chairman of the Insurance Regulatory and Development Authority of India, Ajay Seth, recently raised concerns regarding the bumpy ties between healthcare service providers and health insurance entities. In the process, he has drawn attention to one of the most neglected dimensions of India’s healthcare landscape — the lack of oversight on the relationship between hospitals and insurance providers. Insurance companies and hospitals have often been at loggerheads over revisions in hospital reimbursement rates, empanelment terms, and contract conditions. In August, the General Insurance Council, the umbrella body of all insurers, criticised the suspension of cashless services to policyholders of certain insurers. The IRDAI then received a complaint stating that insurers were acting like a cartel, and the insurance regulator was asked to intervene to ensure that hospitals receive fair treatment charges that match today’s rising costs. The increasing friction between the two key elements in the healthcare edifice is having an adverse impact on patients. Healthcare service providers raise costs annually by 12-14% while insurance companies revise their premiums to cover inflation. This double whammy hits patients the hardest: they have to juggle higher medical bills as well as costlier insurance renewals. Those without coverage face escalating out-of-pocket expenses that push families into penury.

India’s health-insurance penetration remains low — a 2025 Lancet study revealed that 70% of Indians do not have health insurance. Escalating costs of insurance and hospitalisation are unlikely to improve this number. Moreover, the antipathy between insurers and hospitals and the resultant inconveniences for patients are likely to lead to a dip in the purchase of insurance products, the GST 2.0 sops notwithstanding. Hospital managements must also look into structural challenges such as the need for transparency in hospital billing, standardisation of insurer-hospital contracts, and a fair grievance redressal system for patients. At a deeper level, India must re-examine the principle of health as a right, not a privilege. The concept of universal basic health coverage that is tailored to Indian conditions, where access to healthcare is not determined by income, must also be looked into. Without systemic reform, the gap between affordability and access will only widen in healthcare.