The payment gap between claim approval and actual settlement is already large enough to cause hospital strikes, scheme exits, and patient distress across multiple states. But that gap exists today in a market that is, by any measure, still at an early stage of development.
Over the next several years, five structural forces will compound simultaneously. Each one, on its own, would expand the pool of approved but unpaid claims sitting on hospital balance sheets. Together, they will transform what is currently a significant financing problem into a very large one.
This is worth understanding clearly, because the window to build the infrastructure that addresses it is open now, before the problem scales further.
1. Cashless Everywhere is converting reimbursements into a waiting game
IRDAI's Cashless Everywhere mandate is systematically shifting the way health insurance claims are settled. Historically, a large share of insured patients paid out of pocket at the time of treatment and later filed for reimbursement. Under that model, the hospital got paid immediately. The patient bore the wait.
Under Cashless Everywhere, that changes. The insurer pays the hospital directly. The patient pays nothing at discharge. This is better for patients. It is also, structurally, worse for hospital cash flow. Every claim that moves from reimbursement to cashless mode is a claim that now becomes a receivable the hospital must wait to collect.
As compliance deepens and cashless becomes the norm, the share of insurance revenue flowing through this waiting channel will increase. The hospital that once collected from the patient at the point of care now waits for the insurer. The total value of approved, unpaid obligations across the hospital sector will grow directly in proportion to how quickly this transition happens.
2. Insurance penetration is still low and expanding fast
India remains significantly underinsured on health. Retail health insurance and group employer covers continue to grow. Government schemes are expanding both beneficiary counts and geographic reach. Each new person covered under a health insurance scheme is a potential new approved claim that flows through the cashless channel and adds to the waiting pool.
The growth in insured lives is not incremental. It is structural. Every year, millions of households that previously had no cover enter the system. The volume of claims processed through the cashless infrastructure grows with them. The pool of approved obligations waiting for payment expands accordingly.
3. Medical inflation is growing the value of every single claim
Volume is only one dimension. The other is value.
Medical inflation in India is running at approximately 14 percent per annum, the highest in Asia. Average hospitalisation costs are rising sharply year on year. This means that even if the number of claims stays flat, the total value of the approved obligations on hospital balance sheets increases by 14 percent every year.
A hospital that had Rs 2 crore in approved unpaid claims this year will have Rs 2.28 crore next year for the same number of patients. The financing gap grows even when nothing else changes.
4. Healthcare demand is accelerating from multiple directions
India's disease burden is shifting in ways that increase both the volume and value of healthcare claims. The population is aging. Lifestyle diseases, cardiac conditions, diabetes, and metabolic disorders, are rising sharply across both urban and rural populations. Tier 2 and Tier 3 towns are seeing deeper penetration of both insurance coverage and specialist healthcare access.
Each of these trends pushes in the same direction. More patients needing more care, covered by more insurance, going to more hospitals that are newly empanelled under government and private schemes. The number of cashless claims processed annually will rise, and the complexity and cost of those claims will rise with it.
5. Scheme rate revisions will increase claim values materially
The package rates under Ayushman Bharat, CGHS, ECHS, ESIC, and most state government health schemes have not kept pace with the actual cost of delivering care. Hospitals have absorbed the gap for years, often subsidising scheme patients through cross-subsidisation from private-paying patients. That model has limits.
Rate revisions are overdue and inevitable. When they come, the value of every approved claim under these schemes will increase. A hospital that was owed Rs 15,000 per procedure under the old rate card will be owed Rs 20,000 or more under the revised one. Across millions of claims annually, even a modest uplift in package rates produces a substantial increase in the total value of approved obligations awaiting settlement.
Five forces, one direction
These five factors do not operate in isolation. They compound each other. More insured lives means more claims. Higher claim values from medical inflation and rate revisions mean each claim carries more working capital. The shift to cashless means every one of those claims becomes a hospital receivable rather than an immediate patient payment. And growing healthcare demand from an aging, sicker, more widely insured population drives the volume still higher.
The result is a working capital gap that is structurally programmed to grow, year on year, for the foreseeable future.
The financing infrastructure that addresses this gap does not exist in a form that scales today. Banks and NBFCs cannot efficiently see, verify, or price approved health insurance claims. NHCX, the platform that creates and holds the verified record of every cashless claim, has not been connected to the financial system in any meaningful way.
Building that connection is not a niche fintech problem. It is a question of whether India's healthcare financing infrastructure will keep pace with the expansion of healthcare coverage it is simultaneously trying to achieve. Right now, the gap is funded by expensive debt. It does not have to be. But the window to build the alternative before the problem scales significantly is closing.