According to IRDAI's 2024-25 annual report, insurers rejected approximately 8% of the 3.26 crore health claims they handled, translating to roughly one in 12 claims being denied. Of every rupee claimed, about 71 paise is paid out, meaning families can win admission arguments but still lose nearly a third of their medical bills. This structural conflict arises from insurers earning by paying less while hospitals earn by billing more, creating a system where consumers stand between the two parties at their most vulnerable moments.
The managed care model addresses this conflict by having the same company run both insurance and hospital operations. Aditi, a health insurance plan from Narayana Health Insurance, covers surgeries up to ₹1 crore and non-surgical treatment from ₹5 lakh to ₹20 lakh, depending on the variant purchased. This model assumes illness is certain over a lifetime rather than unlikely, with the company's incentive being to keep patients well and treat them efficiently within its own network, where claims are not contested because there is no external party to contest with.
Health insurance premiums rose approximately 9% in 2024-25, with most of this increase coming from higher prices rather than new buyers. The Association of Healthcare Providers of India, representing over 20,000 hospitals, instructed north India members to stop cashless treatment for Bajaj Allianz in August 2025 due to frozen rates and unpaid deductions, though a truce was reached within days. This demonstrates how contract disputes can disrupt the cashless facility most consumers assume is guaranteed.
The managed care model's frictionless care promise holds primarily within the network, which currently means Narayana's facilities in select cities. When patients need specialists, emergency care, or treatment outside the network, ordinary rules apply, returning them to the same challenges they faced with conventional policies. The model also raises questions about whether treatment decisions are influenced by cost considerations that consumers cannot see, as the internal tug-of-war between treatment and margins occurs out of sight. Recent global experiences from Idaho's Medicaid transition reveal similar concerns about continuity of care, access to specialty services, and provider network adequacy during managed care transitions.
The managed care model is positioned as a solution for consumers who live near network hospitals, dread claim paperwork, and want predictable care for generally healthy families. However, it works less effectively for those outside serviceable cities, who want to choose their own hospitals, travel frequently, or manage conditions requiring specialized centers of excellence. Industry experts recommend against dropping conventional health policies for network plans, as low-friction products remain incomplete coverage solutions. The global transition experiences from Idaho's Medicaid program highlight the critical importance of clear contractual protections, adequate transition timelines, and robust provider engagement in program design to ensure successful managed care implementation.
