Rule mandating uniform healthcare rates constitutionally valid: Centre tells Supreme Court

The Centre has told the Supreme Court that a rule requiring private hospitals to charge within a government-determined range of rates for medical procedures is constitutionally valid, even as it conceded that the range itself has not yet been finalised due to a lack of consensus among states.

The submission came in a counter affidavit filed by the Union Ministry of Health and Family Welfare in response to a petition filed by the All India Ophthalmological Society (petitioner) challenging Rule 9(ii) of the Clinical Establishments (Central Government) Rules, 2012. The rule requires hospitals to charge within a range of rates fixed by the Centre in consultation with States.

The petitioner had argued that specialists providing medical procedures in metropolitan cities could not be expected to charge the same rates as those practising in smaller towns and remote areas.

The petition first came up before the Supreme Court in April 2024 when a Bench of Justices Sudhanshu Dhulia and Prasanna B Varale had flagged that private hospitals often get land at subsidised rates on the condition that they reserve a share of beds for poorer patients.

The Bench noted that hospitals routinely fail to honour this commitment. It had then asked the Centre to respond to the plea.

In its response, the Centre defended Rule 9(ii) as a measure rooted in the State’s obligation under Article 47 of the Constitution, to improve public health. It argued that the Clinical Establishments Act, 2010, under which the rule was framed, was enacted precisely because private healthcare in India had remained “largely unregulated and uncontrolled.”

The Centre rejected the petitioner’s argument that the rule violated Article 14, of the Constitution by treating unequal patients equally. It clarified that the rule does not prescribe a single uniform price. Instead, it sets a range within which hospitals retain flexibility to set their own charges, based on factors like infrastructure and quality of service.

On the challenge under Article 19(1)(g) of the Constitution, the right to carry on any trade or business, the Centre argued that the practice of medicine cannot be treated like an ordinary business.

It carries an inherent public interest, the Centre said, which justifies reasonable restrictions under Article 19(6). It drew a comparison to price control measures in other sectors, including the pharmaceutical industry and cinema ticket pricing. Both were previously upheld by the Supreme Court.

The Centre also rejected the claim that the rule violated the right to life under Article 21. It argued that standardising rates would, if anything, further the right to health. This would happen by preventing arbitrary and exorbitant pricing, and by making healthcare costs more predictable for insurers and patients alike.

At the same time, the affidavit was candid about the rule’s stalled implementation. The Centre stated that health remains a State subject. Determining a workable range of rates, it said, requires active participation from States. Most States have been unable to arrive at a concrete proposal, despite multiple rounds of consultation since March 2024. These included a stakeholder workshop, four zonal meetings, and a “Chintan Shivir” held in March 2026.

According to the affidavit, States have repeatedly raised concerns. A uniform pricing framework, they say, may not account for India’s regional diversity in healthcare costs. It could also compromise quality of care, and may discourage investment in medical research and innovation.

The Centre noted that ninteen states and Union Territories have adopted the central Act so far. Seventeen others have their own separate clinical establishment laws. Most of these require hospitals to display their rates, but do not provide for any government-determined range of rates.

The Centre also pointed to a range of existing government health schemes, including Ayushman Bharat, as evidence that healthcare affordability was already being addressed through other means. It noted that out-of-pocket health expenditure had declined from 62.6 percent in 2014-15 to 43.4 percent in 2022-23.

It thus urged the Supreme Court to dismiss the petition.