United India Insurance, which has been the health insurer to Maharashtra for the last four years, had won a fresh mandate from the state for implementing a much larger scheme-universal health coverage- in this June and the cover was in force since July.UII can’t resort to legal action against Maharashtra as there is a clause in the contract that the state government can terminate the contract at any time of its tenure
Mumbai: In an unprecedented move, Eknath Shinde led Mahayuti government in Maharashtra, has suddenly terminated a Rs 3000 crore contract with Chennai based state owned United India Insurance(UII) for executing state’s flagship health insurance scheme – the Integrated Mahatma Jyotiba Phule Jan Arogya Yojana (MJPJAY).
Since July, the scheme, started in 2020 for the economically weaker sections of the state population, for the first time 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 private sector.
UII, which has been the health insurer to the state for the last four years, had won a fresh mandate from the state for implementing MJPJAY 2.0 (with universal health coverage) in this June and the cover was in force since July.
MJPJAY 2.0, since July 1, was offering universal health coverage to all state residents with valid ration cards and domicile certificates, increasing family coverage from Rs 1.5 lakh to Rs 5 lakh. The scheme had expanded covered procedures to 1,356 and empaneled hospitals to 1,900.
Out of the Rs 5 lakh of universal health coverage, UII is covering upto Rs 1.5 lakh per family and the rest is managed by the state agency State Health Assurance Society(SHAS) in assurance mode.
The state government, which hasn’t paid any premium till now, had suddenly preferred to cancel the contact with the insurer without giving any reasons or notice in the last week.
However Ramesh Chavan, CEO,SHAS, that implements MPJAY, while speaking to the media later 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 further 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 will not be able to opt for legal action against the Maharashtra decision as there is a clause in the contract that the state government can terminate the contract at any time of its tenure.
Industry sources sensed there may be non-business reasons during election time(the state will have its assembly election shortly) for terminating such a large contract with a long time trusted partner like UII.
It seemed the state government will implement the universal health coverage on its own without involving any insurers though government of India, which also contributes almost 60 per cent of the premium paid by the state, has been implementing its huge Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) through insurers in many states.
After executing its health insurance scheme through UII for the last four years how the state government will handle a much larger scheme on its own is yet to be known, said industry observers.
Earlier, during the last four years, SHAS had paid an insurance premium of Rs 797 per family, totalling around Rs 1900 crore per year to UII for in quarterly installments providing Rs 1.5 lakh cover .
Under the new universal health coverage, the state had finalised a premium of Rs 1,300 per family for an estimated 2.38 crore family with a total population of 12.3 crore and the total insurance premium was over Rs 3069 crore, which was to be paid to UII.
Chavan said the scheme had seen a 70 per cent increase in surgeries performed over the past five years.
The MJPJAY and Ayushman Bharat-Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) were launched in the state on 1st April, 2020.
Out of the first four years, the scheme was profitable for UII in the first year and on the basis of agreement, it had refunded Rs 265 crore of surplus to the state government.
In the second year, there was no profit and no loss but in the subsequent two years, the scheme was a loss making one for the insurer.
To ensure efficient service utilisation and prevent misuse, SHAS had planned to engage a third-party agency using AI and data analytics while providing universal health coverage..
Alongside MJPJAY, the Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB-PMJAY) also operates in Maharashtra, providing coverage to 83 lakh families identified through the Socio-Economic Caste Census 2011.