That's like saying if everyone maxes out their health insurance, insurance companies will go out of business. In any given year, not everyone is going to use the ~$8000 allocated to them. Also, healthcare in India is cheap. $8000 goes a long way.
Yeah I think ₹5 lakh is excessive. I have a ₹2 lakh cover for me and my wife and unless we both are diagnosed with bone cancer simultaneously we are in no danger of maxing it out.