The health insurance trilemma: who pays, who earns, who saves

Subscribe to enjoy similar stories.The impossible trinity, or trilemma, holds that a country cannot simultaneously maintain a fixed exchange rate, free capital movement, and an independent monetary policy; policymakers must prioritise two at the expense of the third.A strikingly similar trilemma sits at the heart of health insurance: the insurer’s duty to settle claims sustainably, the hospital’s duty to deliver effective, patient-centred care while earning a fair return, and the customer’s demand for affordability. Like the economic trilemma, this cannot be resolved by decree.

All stakeholders must recognise that a functioning healthcare ecosystem is a shared asset, and that each has a clearly defined role in preserving it.Insurer’s sustainability challenge: Paying claims efficiently, delivering robust customer service, and detecting fraud are foundational to what insurance promises, and none come without cost. They require sustained investment in technology, skilled manpower, and advanced analytics.

Expecting high settlement ratios and best-in-class service while indefinitely compressing premiums is not realistic, and ultimately undermines the very affordability customers seek.Hospital’s dilemma: Medical inflation in India has consistently outpaced general inflation, driven by higher input costs, technology-intensive procedures, and longer stays. Hospitals carry significant capital requirements and must remain financially viable to function effectively and invest in the quality of care they provide.Customer’s paradox: Middle-class India has limited headroom for health insurance spend, but the sheer scale of numbers can sustain the system even at lower price points.