‘Medical inflation in India is outpacing general inflation by a considerable margin’
Third-party administrators (TPAs), which act as intermediaries between insurance companies and policyholders, were allowed into the Indian insurance sector in 2001 by the Insurance Regulatory and Development Authority (IRDA). Licensed in 2002, Medi Assist was among the early entrants in the TPA space. Its current CEO, Satish Gidugu, joined the organisation in 2013—at a time when hospitals in India still relied on fax to send admission and discharge details to TPAs. Over the past decade, both global and Indian healthcare landscapes have undergone rapid technological transformation, with companies like Medi Assist playing a key role in driving innovation. Yet, persistent challenges—such as under-penetration and inadequate coverage—continue to hinder the growth of India’s health insurance sector. Against this backdrop, Gidugu shares his views on the pressing issue of medical inflation. Edited excerpts:
How serious is the issue of medical inflation in India today? What are the current inflation rates in healthcare?
Medical inflation in India is a growing concern and one that warrants serious attention. The cost of healthcare is rising at an alarming pace which is significantly higher than general inflation. This trend places an immense financial strain on the average Indian household, especially given that a large portion of healthcare expenses are still paid out of pocket. For many families, a single medical emergency can mean dipping into savings or taking on debt.
We at Medi Assist focus on harnessing the power of data, strong hospital networks, and partnerships with insurers to help policyholders access affordable and high-quality care. Our aim is not only to make healthcare more accessible but also to reduce the burden of rising costs by optimizing both premiums and out-of-pocket spending. In an environment where medical inflation is outpacing income growth, these efficiencies are more important than ever.
How is medical inflation impacting insurance premiums and out-of-pocket healthcare expenses for policyholders?
Medical inflation has become a critical factor influencing both insurance premiums and the overall cost of healthcare for policyholders. In recent years, we've seen medical inflation in India outpace general inflation by a considerable margin, currently estimated at around 12-14% annually. This is primarily driven by the rising cost of medical treatments, expensive pharmaceuticals, and increased operational expenses within the healthcare sector. For insurers, this translates into higher claim payouts, which inevitably impacts premium pricing. Policyholders are now seeing a noticeable uptick in their renewal premiums as insurance companies adjust to the rising cost of care. Additionally, with more people opting for comprehensive health insurance and making claims, the financial pressure on the system increases.
Out-of-pocket expenses are also rising, particularly for consultations, diagnostic tests, and hospitalisations. Factors like the adoption of high-end medical technologies and an upward revision of professional fees are pushing standard treatment costs higher year after year. Despite these challenges, there are ways for policyholders to manage the impact. Choosing health plans with appropriate deductibles, leveraging wellness and preventive care benefits, and opting for long-term or family floater plans can offer better cost-efficiency. It’s also important to compare policies carefully and take advantage of features like no-claim bonuses and cashless hospital networks.
As an industry, we’re working closely with regulatory authorities to promote greater transparency, control costs, and offer innovative solutions that make quality healthcare more accessible and financially sustainable for everyone.
As a leading TPA, what specific role does Medi Assist play in managing healthcare costs for insurers and policyholders?
Our aim at Medi Assist is to manage healthcare costs, it’s a responsibility we take seriously to both our insurance partners and to the millions of policyholders we serve. Our role is to ultimately make the healthcare journey more affordable, transparent, and efficient.
One of the key ways we do this is by leveraging our vast network of hospitals and healthcare providers to negotiate competitive rates. These network arrangements allow us to secure better pricing for treatments and procedures, which directly translates into cost savings for both insurers and insured individuals. Beyond that, our strength lies in operational efficiency. We've invested heavily in technology to streamline claims management and enrollment processes. This not only reduces administrative costs but also minimizes errors and identifies frauds that can significantly inflate healthcare expenses.
Our use of data analytics plays a vital role in managing healthcare costs and enhancing outcomes. By closely analyzing trends in claims and utilization, we can identify cost drivers early and take proactive steps, such as renegotiating provider rates or designing targeted wellness initiatives. These strategies have proven highly effective: we’ve helped reduce healthcare inflation from an industry average of 12–14% to just 5%, delivering significant savings directly to our customers. Claims data not only guides rate negotiations but also informs broader cost-containment measures. Additionally, our AI-powered models have substantially improved fraud detection, enabling insurers to better manage risk and maintain more stable premiums for policyholders. Transparency is another cornerstone of our approach. By equipping members with tools that clarify their coverage and estimate out-of-pocket expenses in advance, we empower them to make smarter, more responsible healthcare decisions.
In essence, our role is to bring together technology, insight, and empathy to help make quality healthcare more accessible and sustainable for everyone involved.
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