Have health insurance? You may still have to pay 10% of your hospital bill

Health insurance policyholders may have to pay 10% of their admissible hospitalisation costs under a proposal being considered by non-life insurers, reported The Times of India (TOI).

The proposal, if approved, could take effect from January 1, 2027, and would cap the policyholder's contribution at Rs 5 lakh per claim. In return, customers would pay lower annual premiums, according to the report.

The proposal is being considered by the General Insurance Council and would also introduce common hospital empanelment and a formal mechanism to settle disputes between insurers and hospitals, the report said.

If implemented, even customers with comprehensive health insurance would have to bear 10% of admissible inpatient hospitalisation costs. This would include hospitalisation arising from accidents and would apply whether a claim is settled through cashless treatment or reimbursement.

Under the proposal, a policyholder would have to contribute 10% of the admissible claim amount, subject to the Rs 5 lakh cap per claim.

For example, if an admissible hospital bill is Rs 5 lakh, the policyholder's share would be Rs 50,000. If the admissible claim is Rs 60 lakh, the 10% contribution would be Rs 6 lakh, but the proposed cap would limit the patient's contribution to Rs 5 lakh.

The proposal would cover retail indemnity products, retail-under-group policies, indemnity components of combination products, internal migrations and portability business. Outpatient claims would remain outside the proposed arrangement.

The co-payment also cannot be waived, reduced or modified through riders or endorsements. The customer's 10% contribution cannot be recovered through another health insurance policy, according to the report.WHY INSURERS ARE CONSIDERING THE MOVE

The proposal comes against concerns over rising healthcare costs and what insurers see as higher spending when patients have comprehensive insurance cover.

According to the TOI report, the industry believes hospitals may order additional diagnostic tests, recommend procedures or extend hospital stays when patients have comprehensive insurance because insured patients may be less sensitive to the cost. Higher-category rooms can also increase the overall bill because doctors' fees and procedure charges are often linked to room tariffs.

A council note cited by TOI said overbilling and provider-induced demand could stem from the perception that insurance-backed patients are less price-sensitive, resulting in higher healthcare costs.

The proposed co-payment is therefore being considered alongside other measures aimed at controlling healthcare costs rather than as a standalone change to health insurance policies.COMMON HOSPITAL NETWORK ALSO PROPOSED

The proposal would introduce common hospital empanelment across insurers, along with outcome-based contracts and a payor-provider grievance forum.

The General Insurance Council plans standard empanelment across more than 4,300 hospitals, according to TOI. The objective would be to establish benchmark tariffs and curb arbitrary billing, while linking hospital contracts to clinical and procedure-wise outcomes.

This would mean policyholders could potentially have a more standardised network of hospitals and insurers could use common benchmarks while negotiating hospital rates.CONCERNS OVER CUSTOMER CHOICE

The proposal has also raised concerns about whether customers should be required to accept a co-payment even if they are willing to pay higher premiums for more comprehensive coverage.

Shreeraj Deshpande, a health insurance expert who earlier headed operations at a general insurer, told TOI that customers should be able to choose between a cheaper policy with a deductible and a policy that provides full compensation.

“People buy insurance to be indemnified for their costs,” Deshpande said, according to the report. He argued that customers willing to pay a higher premium for a higher sum insured should not necessarily be required to bear part of the cost.

An industry executive quoted by TOI also raised concerns over competition if insurers collectively decide not to offer full-compensation policies.

The proposal is still being considered by the General Insurance Council. The TOI report does not indicate that the 10% co-payment has been finalised or that it will automatically apply to all health insurance policies from January 1, 2027.

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