I was very optimistic when the health insurance industry was privatized in India. In the past, only the public sector insurance companies could offer health policies called MediClaim. These were of poor quality because they were based on inadequate actuarial data and were treated as loss leaders since medical costs used to be very low. My hope was that the introduction of competition would prompt health insurers to improve the quality of their coverage because it would be in their best interests to make sure that their customers remained healthy and got the right medical care when they fell ill.
I've been disappointed. Part of the problem is that most health insurers are still bleeding money, as a result of which they haven't been able to do anything innovative. The bulk of their income comes from providing health coverage to corporate employees. This is a cut-throat market and…
