Government Plans to Control Rising Health Insurance Costs in India
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The Government of India is planning to control the inflated health insurance costs. For this, the Indian government is planning to bring the National Health Claims Exchange — an online platform used for processing health insurance claims — under the direct control of the Finance Ministry and the Insurance Regulatory and Development Authority of India (IRDAI). This move aims to stop hospitals from overcharging patients, especially those with high insurance coverage.
Why This Step is Being Taken?
Healthcare costs in India are increasing rapidly. According to a global report by Aon, a professional services firm, medical costs in India are expected to rise by 13% in 2025. This is higher than the global average of 10% and more than the 12% increase in 2024.
The Indian government and IRDAI conducted a review and found that many hospitals are inflating treatment bills, especially for patients who have higher insurance coverage. Because of this, insurance companies are being forced to increase the cost of health insurance premiums, making it expensive and difficult for many people to afford health insurance.
For 52% of health insurance policy owners, the premium increased by over 25% in the last 12 months, according to a survey by LocalCircles. For this survey, the researchers gathered inputs from 11,000 people in 324 districts in India.
21% of health insurance policy owners indicated that the premium increase was 50% or more in the last 12 months while 31% indicated that it has risen by 25-50%, as per the survey. It was also mentioned by the survey that for 15% of people the insurance premium was ‘same as last year’.
A comparative study was also done by the survey researchers with their own 2022 survey about personal health insurance. This study concluded that “The personal health insurance policy owners who had seen an increase in their premium by over 25% has dipped from 62% in 2022 to 52% this year.” What it means is that the percentage of policyholders affected by significant premium hikes has come down by 10% this year when compared to the 2022 survey.
States with Highest Increase in Health Care Costs
| Rank | State | Leading City Contributors |
|---|---|---|
| 1 | Delhi | New Delhi |
| 2 | Maharashtra | Mumbai, Raigad, Nashik |
| 3 | Andhra Pradesh | Guntur, Visakhapatnam |
| 4 | Uttar Pradesh | Ghaziabad, Noida |
| 5 | Kerala | Thiruvananthapuram |
| 6 | Rajasthan | Jaipur |
| 7 | Karnataka | Mangaluru |
| 8 | Telangana | Hyderabad |
For 2023-24, Indian insurers collected $12.4 billion in health insurance premiums, an increase of about 20% over the previous year, according to the latest IRDAI annual report. New Delhi residents may pay 10% to 15% more for new health policies after an extraordinary spike in claims related to air pollution in 2024 in India’s capital. Respiratory claims rose 8.3% from fiscal year 2023 to fiscal year 2025 in the state of Delhi.
How the Government Plans to Fix This?
To solve this issue, the government wants to bring the National Health Claims Exchange under stricter supervision. Currently, the platform is managed by the National Health Authority (NHA), which works under the Ministry of Health. It was built with input from IRDAI, but IRDAI does not directly control it.
The government believes that if IRDAI and the Finance Ministry oversee the platform, insurance companies will have stronger bargaining power. This means they will be better able to negotiate fair treatment rates with hospitals, helping to control the rising medical costs.
Impact on Insurance Industry
Because of these high hospital charges and expensive premiums, fewer people are renewing their health insurance policies. Industry data shows that the growth rate of health insurance premiums has dropped to just 9% in 2024–25, compared to over 20% growth in the previous year.
If the government succeeds in regulating treatment costs and preventing overcharging, it could help bring down premium costs and make health insurance more affordable for everyone.
What is National Health Claims Exchange (NHCX)?
The Government of India has built the National Health Claims Exchange (NHCX) gateway under the Ayushman Bharat Digital Mission (ABDM). NHCX aims to streamline and standardize health insurance claim processing, enhancing efficiency in the insurance industry and improving the patient experience.
NHCX serves as a gateway for exchanging health claim information among insurers, third-party auditors, healthcare providers, beneficiaries, and other relevant entities and ensures interoperability, machine-readability, auditability, and verifiability, making the information exchange accurate and trustworthy. This system will enhance efficiency and transparency in the insurance industry, benefiting policyholders and patients.
Supported by the Insurance Regulatory and Development Authority of India (IRDAI) and General Insurance Council (GIC), NHCX will enable standardized and faster health insurance claim processing. As on 21.07.2024, 34 insurers and Third Party Administrators (TPAs) are currently live on NHCX and approximately 300 hospitals are ramping up to start sending their claims on NHCX.
Click here to download PDF on National Health Exchange