Maharashtra Ends Contract with Public Sector Insurer for Flagship Health Scheme
The Maharashtra government has terminated its ₹3,000 crore contract with Chennai-based United India Insurance (UII) for implementing its flagship health insurance scheme — the integrated Mahatma Jyotiba Phule Jan Arogya Yojana (MJPJAY). The cancellation was attributed to “unsatisfactory response” from the insurer, leaving the state government to likely implement universal health coverage independently, without involving insurance companies.
Key Points:
- The Central government covered 60% of the premium, while the remaining was paid by the Maharashtra state government.
- United India Insurance had managed the scheme for the last four years but faced issues with delayed payments and complaints from hospitals.
- The state government may now execute the scheme without insurers, raising questions about how such a large scheme will be managed.
Reasons for Termination
Ramesh Chavan, CEO of Mahatma Phule Jan Aarogya Yojana, stated that the insurer had not paid the ₹93 crore performance bank guarantee required after signing the contract in June. Additionally, complaints from hospitals and delays in claim payments worsened the situation, leading to the contract termination.
Chavan mentioned that several meetings were held with the insurer’s leadership, but no improvements were seen, forcing the government to take action. Despite a fresh mandate won by UII in June 2023 for implementing MJPJAY 2.0, the company struggled to meet expectations.
Financial Struggles of UII
In the initial years, the scheme was profitable for United India Insurance, with a surplus of ₹265 crore refunded to the state. However, in subsequent years, the scheme became loss-making for the insurer, which might have contributed to its poor performance.
The new universal health coverage plan set a premium of ₹1,300 per family, targeting 2.38 crore families with a total population of 12.3 crore. The total premium exceeded ₹3,000 crore, but the state has yet to pay the premium, prompting the abrupt cancellation of the contract.
Scheme’s Popularity Amid Rising Healthcare Costs
The MJPJAY 2.0 scheme, launched in 2020, was well-received, offering cashless services for up to ₹5 lakh per family for critical treatments. The scheme had expanded its coverage to include over 1,356 procedures and had empanelled 1,900 hospitals.
However, the sudden cancellation leaves a gap in healthcare coverage for millions of families, and it remains unclear how the Maharashtra government will manage the programme without the backing of an insurance partner.
