Rising hospital bills and health insurance premiums: Will Budget 2026 help to regulate this? Check what experts are demanding from hospital groups and IRDAI

Are you feeling the stress of increasing health insurance premiums and sky-high hospital bills? You are definitely not alone. Medical inflation is one of the most pressing issues today, with healthcare costs climbing faster than the general inflation rate. Because of this, health insurance policies are also getting pricier and harder to afford, especially for middle-class families. This often results in insufficient coverage, higher out-of-pocket expenses, and disruptions in long-term financial planning.

There has been a growing demand for government bodies, insurers, and hospital groups to collaborate and tackle the inconsistencies in hospital pricing and rising medical inflation. This isn’t just a future problem; it’s something that needs immediate and coordinated action.

As Budget 2026 is around, individual taxpayers are hoping that it brings much needed regulation in pricing of health insurance premium and cost of medical treatment across hospitals in India.


Also read: Income Tax Budget 2026 Expectations Live

Medical inflation in India is among the highest globally

Check out the prices of surgeries and medical treatments, which really show how much medical inflation has increased in India over the past 5 years.

According to the policybazaar, these are the costs for high-end surgeries

Surgeries	2020	2021	2022	2023	2024
Cancer	30.1	34.6	39.4	44.6	50.8
Heart Transplant	20.5	23.6	26.4	29.9	34
Liver cirrhosis	14.7	16.9	18.9	21.3	24.3
Kidney Transplant	10.8	12.4	14.1	15.9	18.2

“Private healthcare is the primary driver of rising costs. Hospitalisation charges, advanced diagnostics, medical devices, and newer therapies continue to push treatment bills higher year after year,” says Rakesh Goyal, Director at Probus.

According to the latest The Personal Loan Story by PaisaBazaar, medical inflation rate of India is between 12-15% per year and is one of the highest in Asia1, creating a growing gap between cost and cover.

The report further points out that according to IRDAI, health insurance coverage in India has nearly doubled from 288 million people in 2014–15 to about 573 million in 2023–24, yet penetration remains low at around 40–42%, leaving a large number of families without adequate health cover.

“Medical inflation in India is among the highest globally. Without significant, timely, and coordinated regulatory interventions, this trend is likely to continue,” says Debashish Banerjee, Partner, Deloitte India

Hospital bills and discharge summaries are rising faster than many people's incomes, driven by higher procedure costs, expensive medical technologies, widening treatment protocols and inconsistencies in hospital pricing.

Why GST on hospital room rents need urgent review

Removing GST on hospital room rents in Budget 2026 would be a patient-first reform that reflects today’s healthcare costs and provides immediate relief from rising hospitalisation expenses.

“One immediate and impactful step in Budget 2026 would be to remove GST on hospital room rents altogether. The current ₹5,000-per-day threshold is far too low and no longer reflects today’s healthcare realities - particularly in urban centres where even standard private rooms routinely cost much more. As a result, patients end up paying GST for basic hospitalisation needs. Removing GST on hospital rooms would be a practical, patient-first measure that can immediately ease financial stress on households and help moderate overall medical inflation.” says Amit Chhabra, CBO of General Insurance, Policybazaar.

Empowering IRDAI to regulate hospital pricing and claims oversight

Deloitte India is pushing for a stronger focus on health claims oversight and clearer pricing to tackle rising healthcare costs.

It proposes empowering IRDAI to play a more active role in overseeing hospital pricing, while also integrating the National Health Claims Exchange (NHCX) with direct audit trails to ensure better monitoring of claims and billing practices.

Together, these measures are expected to bring greater transparency to the claims ecosystem, help curb excessive or inconsistent hospital charges, reduce medical inflation, and contribute to more sustainable health insurance premiums for policyholders, ultimately improving trust and efficiency across the healthcare and insurance value chain.

In addition to the IRDAI, there is a strong need for a dedicated healthcare regulator

“We need a healthcare regulator that has “teeth”, which can issue directions that are binding, slap real penalties on erring players, and deliver time-bound decisions to make for deterrence and accountability. India’s persistently high medical inflation, widespread excursions beyond the general increase in inflation rates must require budgetary interventions that strengthen insurance claims oversight and better hospital pricing transparency, “says Goyal.

“Transparent hospitals and faster, cleaner settlements of claims should receive incentives to push medical inflation down and improve goodwill for the entire healthcare ecosystem,” he added.

Health insurance premiums are also increasing

On the other hand, health insurance premiums are also rising due to rising health care costs and medical services per year.

“Health insurance premiums are also on the rise, with increases of around 10–15 percent projected for 2025, as insurers face higher claim costs,” says Banerjee.

“Targeted regulatory intervention by IRDAI could help address cost pressures and, in turn, help moderate the impact of medical inflation on policyholders,” he added.

Billing practices often lack transparency, leaving patients unsure whether they are paying for necessary care or inflated line items. Addressing this inconsistency is critical if medical inflation is to be brought under control.

“There is a need for the government to initiate discussions with hospitals and insurers to explore ways to contain costs, including standardising billing practices and examining pricing for certain medicines and procedures,” says Banerjee.

In conclusion, current indicators suggest that medical inflation in India remains elevated. While this is expected to continue in the near term, coordinated measures involving regulators, insurers, and healthcare providers could help contain its impact on policyholders.