Department of Financial Services (DFS) will be meeting representatives of some of the major hospitals to ensure the hospitals have adjusted the medical expenses as per the new rates of goods and services taxes (GST) that have been implemented for the health insurance premium, confirmed a source from the Ministry of Finance aware of the matter.
After the GST on health insurance premium was made nil in September, hospitals were asked to bring down the medical expenses and adjust according to the new rate of premiums of insurance. However some of the major hospitals have not yet passed on the rate cuts to the medical expenses.
After the new rates of GST were implemented in September, DFS has intervened to convince leading hospital chains to hold health treatment charges at their hospitals in 2026. Hospitals have been asked not to increase the charges as this will help keep health insurance premiums stable next year for people.
Hospitals have committed to DFS to keep the expenses and rates unchanged through 2026, and they were instructed that any future revisions can be made only after mutual consultation with the insurance companies.
If the hospital charges are kept unchanged, insurers won’t be able to increase the premiums.
Medical inflation in India is usually more than 10 percent and to keep pace with the medical inflation, insurers typically increase the premiums by 8–12 percent annually. This year, with GST rate cuts, the margins of the insurance companies are getting thinner and with hospitals further increasing the charges will have more adverse impact on their margins.
