that the Govt healthcare is in shambles.But the private market is thriving

The article is not about failure of government health care system, it is about How the extreme problem of Indian health care can be solved. And all the point mentioned are strictly in alignment with India, Indian conditions, and Indian problems. It has no relation with American debate.

In south india,aravind eye care has a 40% profit margin even with 70% free patient treatment.
in mumbai a 1298 ambulance service is run privately.it is profitable and still offers 30% people free service.

those imaginging that the poor will not be taken care of need to recognize that private charities in india run some of the best hospitals -with almost 50% patients being treated free.like the amritanandmayi math kochi facility.
far better than taxpayer subsidised facilities,such private facilities provide better and cheaper healthcare for us. lots of traditional medicines which are regarded well in indian minds provides competition to allopathy -so the healthy competition helps keep the allopathy lobby down unlike in the west where allopathy debunks everything else.

It’s not a requirement – yet – but the state governments have consolidated the industry through mandates (to cover various medical items) and other draconian regulation. In some states, there are just 1 or 2 insurance providers, because the government-controlled system favors them.

This is an interesting debate which has been raging on in the US and UK for decades now. What you describe sounds horribly like the National Health Service of the UK, where the government insists on pretending that the system of free healthcare rights for everybody is still working without a hitch.

This despite the decades of neglect, massive lack of qualified doctors and obscene over-management (more cretinous and corrupt managers than doctors to do the work), offensively long waiting lists and almost monthly scandals about the level of (un)cleanliness of hospitals.

The government in the UK enjoys blindly throwing money at the problem instead of actually diagnosing the real root causes of inefficiency in the system. On top of this, It always amazes me how the public insists on having everything for nothing. In the UK, as I understand it, people regularly demand cosmetic surgery, Viagara and other clearly non-essential but very costly treatments for FREE, on the NHS! No wonder the consequence is that money and resources are not available for other treatments and worthy causes.

A situation is developing where paying voluntarily for costly health insurance and going to private healthcare hospitals is the only way to guarantee even a basic level of service. People with any experience of NHS waiting lists or treatment will immediately choose to pay over the odds for insurance to save themselves the pain of the NHS over and over again.

As you state, allowing insurance to become a free market is a good thing, but at the moment the trend appears to me at least to suggest that the insurers are increasing prices because they know that they have a captive audience. I suppose that the situation is somewhat different in the USA where health insurance is a requirement (not just a choice) and there are many competing companies offering insurance. However I have no experience of the USA so cannot comment more than this.

So, it appears that your proposed solution has merit based on the evidence from the health systems of other countries. It is clear that following the example of the government regulated NHS in the UK is totally the wrong way to go. If India has a chance to break the cycle then it should do so immediately.