Health Treachery

“Whatever excuses you have

today for not buying health

insurance will sound totally

silly to your widow tomorrow.”

— Anonymous

It is a deception that does not reveal itself when you are opening your cheque book and letting your puny signature validate a hefty payment. That languid moment of signing up is filled with brochures, smooth sales pitches, limited-period discounts and the comforting assurance that you are ‘covered’. The reckoning arrives later; in hospital corridors, billing counters and intensive care units. That’s when you find out that the policy you faithfully paid for is only a contractual mirage. For it is in that moment of medical vulnerability that India’s health insurance industry sheds its glossy marketing skin and reveals its true character – adversarial, evasive and shamelessly profit-driven. All but ready to bite.

Somehow, over the years, what was sold as protection has increasingly turned into obstruction. Claims are not facilitated but scrutinised for rejection. Compassion is replaced by clauses. And the system, instead of standing by customers in their most fragile moments, appears designed to wear them down until they either give up or settle for less than they are entitled to. Such a scenario is bad anywhere in the world, but in a country with limited public healthcare capacity and high out-of-pocket medical expenditure, it is not merely service failure. It is betrayal.

Denial by Design

India’s health insurance market has expanded exponentially over the past decade, driven by runaway medical costs, tax incentives and aggressive private-sector penetration. Yet this expansion hasn’t been accompanied by a corresponding improvement in trust or outcomes. Data released by the insurance regulator (IRDAI) shows that thousands of crores worth of health claims are repudiated or partially paid each year. Behind these numbers lies a disturbing pattern: denial has become a business strategy.

The grounds are familiar and depressingly repetitive. Alleged non-disclosure of pre-existing conditions. Delays in claim intimation. Exclusions buried deep in policy documents. Or disputes over what constitutes ‘medically-necessary’ treatment. Hypertension, diabetes or minor conditions that were never treated or disclosed by agents suddenly become grounds for total rejection. Emergency hospitalisations are penalised because a family informed the insurer hours or days late, as if medical crises follow predictable timelines.

What makes this overtly egregious is that many of these rejections do not withstand judicial scrutiny. Consumer courts and insurance ombudsmen routinely overturn claim denials, ordering insurers to pay up with interest. Yet insurers persist with the same tactics because the economics are stacked in their favour. For every claimant who fights back, dozens quietly absorb the loss, exhausted by the process or intimidated by legal complexity. Or still reeling under the bereavement in the family.

A Fractured Ecosystem

The dysfunction is compounded by a fractured ecosystem where insurers, third-party administrators and hospitals operate in silos, each deflecting responsibility. Private hospitals often demand hefty deposits despite ‘cashless’ coverage, citing delays or lack of confirmation from insurers. Insurers, in turn, question hospital billing practices, raising queries that stall approvals. Caught in between are patients and families forced to arrange large sums at short notice, often through loans or asset sales.

This inimical triangle has ended up creating a fertile ground for exploitation. Inflated bills on one side and aggressive claim pruning on the other cancel each other out. Except for the patient, who pays the price regardless. The purpose of insurance, to cushion financial shock, is lost in transactional warfare.

Mental health coverage illustrates this failure starkly. Despite clear regulatory directives and Supreme Court observations mandating parity between mental and physical health treatment, implementation remains patchy at best. Claims related to psychiatric care are often rejected citing vague justifications such as ‘non-standard treatment’ or ‘lack of institutionalisation’. Legal compliance exists on paper; denial thrives in practice.

Toothless Regulator

Hovering over this broken system is the Insurance Regulatory and Development Authority of India, a body that seems to have gone out of its way to prove that it is a regulator without teeth. While IRDAI regularly issues circulars and guidelines — for faster cashless approvals, simplified policy language and fair claims practices — enforcement is weak and consequences minimal. Consumers, legal eagles and even industry insiders ask an uncomfortable question: If insurers can repeatedly flout directives without any meaningful penalty, what purpose does this regulator truly serve?

Insurers have missed timelines, ignored parity mandates and continued opaque practices with little fear of reprisal. Monetary penalties, when imposed, are often too small to act as deterrents for large insurance firms. Regulatory action tends to be reactive, not preventive, arriving after the damage has already been done. As a result, companies such as Bajaj Allianz, Star Health, Care Health and others have repeatedly appeared in consumer court rulings and ombudsman complaints over arbitrary claim repudiations. In many cases, claims were honoured only after legal intervention; a tacit admission that the original denial was indefensible. Yet systemic accountability remains elusive.

The power imbalance is glaring. Insurers deploy legal teams and technical experts to interpret policies narrowly. Policyholders, often traumatised by illness or bereavement, are expected to spar with ombudsmen, grievance portals and courts for months, even years. Regulation, instead of shielding the vulnerable, has become largely performative.

Emotionally Devastating

The human cost of such failure is profound. A denied or delayed claim is not just a financial setback; it is emotional devastation on top of physical suffering. Families planning responsibly through insurance are forced into debt. Savings earmarked for education or retirement are wiped out. The psychological toll — anger, helplessness and loss of trust — lingers long after hospital discharge (or last rites).

India’s middle-class is exposed the most. Serious illness can consume a hefty chunk of a household’s annual income. Health insurance is often the only barrier between stability and ruin. When the barrier collapses, the fallout extends beyond economics into mental health, family cohesion and long-term opportunity. That this happens not because of lack of coverage but because of deliberate procedural obstruction makes it all the more indefensible.

Clearly, India does not suffer from an absence of insurance penetration. It suffers from the absence of integrity. Reform must be structural, not cosmetic. Policy documents need standardisation and plain language, eliminating the interpretative games that favour insurers. Claim processing must move to a unified, mandatory, digital platform that tracks every action and delay transparently. Ombudsman offices require strengthening, not token expansion, with strict timelines and binding authority.

Most important, regulation must bite and hurt. Claim repudiation should attract meaningful penalties when found arbitrary. Repeated offenders should face escalating sanctions. Mental health parity must be enforced, not just stated. Insurers must be accountable not only for solvency, but for conduct too. Let’s face it: health insurance cannot continue to operate as a low-risk, high-reward extraction model protected by weak oversight.

Choice: Trust or Betrayal

Health insurance was meant to protect citizens at their most vulnerable, not test their endurance. In India today, it too often does the latter. The sector has drifted away, dangerously so, from its social purpose, by prioritising margins over medicine and contracts over care. Unless the balance of power is urgently corrected through stronger regulation, genuine accountability and systemic transparency, health insurance will remain what many already believe it to be: a legalised racket masquerading as financial security. In a country where illness can determine whether a family sinks or floats, anything less than humane, dependable and enforceable insurance is not merely a policy failure. It is a betrayal, one that can lead to a generational cycle of debt.

Soliloquy: Banks fleece you too. Over the last few years, banks and health insurers have jumped into bed. High Net-Worth Individuals are targeted by health insurance providers through banks. During the selling process, the friendly banker promises quick and easy claims. When a claim is filed, the customer finds himself running from pillar to post. If he approaches his banker, he only gets mumbled apologies. A candle and a rejected claim later, the customer dials the insurance firm’s toll-free number, makes call after desperate call, all for a legally-valid settlement that almost never comes through.

The writer can be reached on narayanrajeev2006@gmail.com. Views expressed are personal. The writer is a veteran journalist and communications specialist