Insurance companies want policyholders to pay 10% of health claims

The proposal, being considered by the General Insurance Council, would pair the change with common hospital empanelment and a formal mechanism for settling disputes between insurers and hospitals.

MUMBAI: Non-life insurers are considering a 10% co-payment by policyholders on retail health policies from Jan 1, 2027, with the patient's contribution capped at Rs 5 lakh per claim.

In return, customers would pay lower annual premiums.The proposal, being considered by the General Insurance Council, would pair the change with common hospital empanelment and a formal mechanism for settling disputes between insurers and hospitals. The arrangement would require even those with comprehensive health insurance to keep funds for medical emergencies, as they would have to pay 10% of admissible inpatient hospitalisation costs, including those arising from accidents, whether claims are settled through cashless procedure or reimbursement.

Outpatient claims would remain outside scheme

The proposal covers retail indemnity products, retail-under-group policies, indemnity components of combi products, internal migrations and portability business. Outpatient claims would remain outside the scheme.Co-payment cannot be waived, reduced or modified through riders or endorsements, and the customer’s 10% contribution cannot be recovered from another health insurance policy.“The choice between a cheaper policy with a deductible and a full-compensation policy should rest with the insured.

People buy insurance to be indemnified for their costs. It would be unfair to customers willing to pay a higher premium for a higher sum insured to still bear part of the cost, and this could discourage them from buying high-value policies,” said Shreeraj Deshpande, a health insurance expert who earlier headed operations at a general insurer.

While the industry is seeking to address what it sees as cost distortions in healthcare, some fear a mandatory requirement could be anti-competitive.

“If the industry collectively decides that no one will offer a full-compensation policy, it might catch the attention of the Competition Commission,” said an industry executive.The logic behind the measure is that hospitals may order additional diagnostic tests, recommend procedures and extend hospital stays when patients have comprehensive insurance cover. Higher-category rooms can also increase total bills because doctors’ fees and procedure charges are often linked to room tariffs.

With insurance covering the full bill, patients may have less incentive to question charges or choose lower-cost hospitals.“This behaviour (overbilling and provider-induced demand) stems from the perception that insurance-backed patients are less price-sensitive, leading to inflated healthcare costs,” a council note said.The proposal also calls for common hospital empanelment, outcome-based contracts and a payor-provider grievance forum. GI Council plans standard empanelment across more than 4,300 hospitals to set benchmark tariffs and curb arbitrary billing, while linking contracts to clinical and procedure-wise outcomes.