The Maharashtra government has terminated the Rs 3,000 crore contract with Chennai-based public sector United India Insurance (UII) for implementing the state’s flagship health insurance scheme — the integrated Mahatma Jyotiba Phule Jan Arogya Yojana (MJPJAY) — citing “unsatisfactory response” from the insurer.
Instead, the state government is likely to implement the universal health coverage on its own without involving any insurers. The Central government contributes around 60 per cent of the premium while the balance is paid by the State.
After executing its health insurance scheme through the public sector insurer for the last four years, it’s not clear how the state government will handle such a large scheme on its own without the aid of an insurance company.
Ramesh Chavan, CEO, Mahatma Phule Jan Aarogya Yojana, said that the contract was terminated because of unsatisfactory response from the insurance company. “After we signed the contract in June, the company was to pay Rs 93 crore performance bank guarantee which they did not pay. Additionally due to increase in claim amount last year, the company was delaying the payment and we started receiving a number of complaints from the hospital,” he said.
Chavan added that the government held around two to three meetings with the higher leadership of the company but the performance did not improve. “We finally had to take action,” he said.
UII had won a fresh mandate from the state for implementing MJPJAY 2.0 (with universal health coverage) in June and the cover was in force since July this year.
While the scheme was profitable for UII in the first year, it had refunded Rs 265 crore surplus to the state government. There was no profit and no loss in the second year, but in the subsequent two years, the scheme was a loss-making one for the insurer. This could be one reason for the insurer to show an unsatisfactory response, according to official sources.
Under the new universal health coverage, the state finalised a premium of Rs 1,300 per family for an estimated 2.38 crore families with a total population of 12.3 crore. The total insurance premium was over Rs 3,000 crore, which was to be paid to UII. The family coverage was increased from Rs 1.5 lakh to Rs 5 lakh.
UII was to cover up to Rs 1.5 lakh per family and the rest was to be managed by the state agency State Health Assurance Society (SHAS). However, the state government hasn’t paid any premium till now and, instead, preferred to cancel the contact with the insurer without giving any reasons or notice last week, an insurance official alleged.
The insurer is unlikely to take any legal action against the Maharashtra government as there is a clause in the contract that the state government can terminate the contract at any time of its tenure.
At a time when healthcare expenses had gone through the roof, the scheme was popular among people.
SHAS had paid an insurance premium of Rs 797 per family, totalling around Rs 1900 crore per year to UII in quarterly instalments in the last four years.
MJPJAY 2.0 was offering universal health coverage to all state residents with valid ration cards and domicile certificates.
Started in 2020, the scheme for the economically weaker sections had provided universal health cover to the entire population of the state with end-to-end cashless services for identified diseases through a network of service providers from the government and the private sector.
The MJPJAY and Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) were launched in the state on April 1, 2020. The scheme had expanded covered procedures to 1,356 and empanelled hospitals to 1,900.
