The General Insurance Council (GIC), along with the Insurance Regulatory and Development Authority of India (IRDAI), is in talks with the central government to establish an independent regulatory body for the healthcare sector, said Ramaswamy Narayanan, CMD of the General Insurance Corporation of India.
The proposed regulator would function much like other sectoral watchdogs, such as IRDAI for insurance, Securities and Exchange Board of India (SEBI) for capital markets, and the Reserve Bank of India (RBI) for banking.
According to Narayanan, two major issues have prompted this move: fraudulent practices and discriminatory pricing by hospitals based on a patient’s insurance status.
In its current form, the healthcare industry lacks pricing standardisation and oversight, Narayan said.
“Today, when a patient walks into a hospital, the first question asked is whether they have an insurance policy. If the answer is yes, the hospital’s attitude, and pricing, often changes dramatically,” he explained.
Hospitals routinely charge insured patients significantly more than cash patients, sometimes inflating costs threefold, triggering higher premiums, and this practice, while normalised, amounts to a systematic form of fraud, he said.
Moreover, National Health Authority (NHA) report under Ayushman Bharat highlighted that hospitals often charge more for insured patients than uninsured ones, even for identical treatments.
According to the report, private hospitals were found billing two to three times more for insured patients under health schemes.
According to Narayan, this practice not only inflates medical bills for insurers but also leads to a rise in premiums for consumers.
“Eventually, policyholders are penalised through higher annual premiums. While the IRDAI has set limits on annual premium hikes, the underlying problem remains unaddressed,” he said.
Aon’s 2025 Global Medical Trend Rates Report pointed out that the Indian insurance sector has seen a 30 percent increase in health insurance claims over the past three years, between FY22 and FY25, fuelled by inflated billing practices, especially for insured patients.
This demand for a healthcare regulator comes at a time when healthcare costs are rising faster than inflation.
An ACKO Health Insurance Index 2024 report said, medical inflation is running at around 14 percent annually, more than double the retail inflation rate.
This rapid surge is causing medical bills to balloon, escalating the financial strain on families and pushing many to incur debt for healthcare expenses, the ACKO report said.
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