Premature termination of health insurance; 45.6 lakh beneficiaries sans cover in Punjab


AS MANY as 45.6 lakh beneficiaries of Centre’s and Punjab’s Ayushman Bharat – Mukh Mantri Sehat Bima Yojana (AB-MMSBY) are sans any health insurance cover in the state for past six months, thanks to premature termination of contract with the insurance company during the regime of previous government.

The “immediate termination” order by Punjab government’s health department came in December 2021, leaving the beneficiaries, requiring medical attention, to fend for themselves or just leave the treatment midway.

The Health department terminated its contract prematurely with SBI General Insurance, chosen by the government of Punjab to service the health insurance scheme citing that “the company was taking more than the stipulated 15 days’ timeline for the payment to the hospitals or it was penalising the hospitals unnecessarily.” The termination of contract took place on December 29, 2021, when Congress led by the then Chief Minister Charanjit Singh Channi was ruling the state. OP Soni was the minister for health at that time. The agreement would have otherwise come to an end on August 18, 2022.

The department did neither penalise the company for those erroneous actions nor served them any notice for blacklisting. The termination of agreement came when the insurer was bleeding due to higher claims than the premium. The agreement was terminated just few days before the code of conduct came into place for 2022 Assembly elections. Otherwise the company was expected to have an estimated loss of  Rs 600-700 crore till the end of the contract. As per the contract, company’s financial liability ends on the termination date itself.

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Premature termination of health insurance; beneficiaries without a cover in Punjab

Now this additional burden of Rs 600-700 Crore will have to be borne by the incumbent government. As on today, the liability on the government is to the tune of Rs 249 crore even when most of the private hospitals and government hospitals like GMCH-32 have stopped entertaining the Punjab’s patients under this scheme.

“The  contract provided for a preliminary termination notice of 30 days to the company before serving the final termination notice. However, the department was in questionable hurry to terminate the contract with immediate effect without making any alternate arrangements for those 45 lakh families. Even if we put aside several hundred crores loss to the exchequer, can we ignore the plight of so many deserving patients dying because the dialysis facility or radiation facility is no longer available to them?” asked a functionary of the government.

The government took a legal advice by a private lawyer before proceeding with the termination. Interestingly, the then minister and department officials preferred to take the legal opinion from a private lawyer rather than government’s Advocate General and his battery of lawyers. The legal opinion cost the state exchequer Rs 2 lakh.

Permission was not taken from the Finance Department for terminating the contract. Had it been done , FD would have disagreed as it has potentially put an extra burden of almost Rs 600-700 crore on state exchequer and has benefitted the insurance company by that much amount. As soon as FD got to know about immediate notice  they impressed upon  the health department to issue a clarification that it is not a final termination. But by that time company had taken a stand that since the agreement has been terminated , it will not be responsible for any financial liability accrued after December 29.

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On Monday, Chief Minister Bhagwant Mann had a meeting with the officials of health department and discussed the issue. The officials are learnt to have briefed the CM about the whole issue. “We owe several government and private hospitals and Chandigarh hospitals about Rs 250 crore. The CM was told that the government would have to pay up this as liability. The government will clear this to ensure that the residents keep getting treatment. The next tenders would be called now,” a source privy to discussions said.

He added that soon after the termination of the contract, the department had floated tenders afresh and received most suitable bid at triple the price of the premium earlier. While the contract with SBI-GIC was done at Rs 1050 per beneficiary, in the fresh tenders, it received the bid for premium at Rs 3000 plus. The Finance Department however put objections and the tender was never allotted. Even at the time of termination, it was a forgone conclusion that the new premium will be at-least double of the ongoing premium.

The Centre and state had to pay the company a premium of Rs 458.45 crore for insuring 45 lakh beneficiaries at a premium of Rs 1050 each. As the premium was to be paid on six monthly basis, the government had paid a premium of Rs 142 crore. As the Centre pays 60 per cent of the premium of 14 lakh families, listed as BPL by the Centre,  its share was about Rs 100 crore in the total premium. While Centre only pays premium for 14 lakh families, the state extended the scheme to 45 lakh families and renamed the Ayushman Bharat Scheme as Ayushman Bharat – Mukh Mantri Sehat Bima Yojna. With the termination, even the BPL families are not getting any insurance.

OP Soni, when contacted said, “The company was not woking. There were complaints that they were not paying claims. I held at least 10 meetings with them. There were protests across the state. Indian Medical Association (IMA) was holding series of protests. I had no personal interest. I had people’s interest on mind. I wanted them to get insurance. When the company was not doing anything, the best was to terminate the contract.”

A spokesperson of SBI, in an e-mail to The Indian Express said, “We, at SBI General Insurance, have always been committed to our customers and are well-placed to serve their requirements. Since our onboarding as an official insurer under the Ayushman Bharat Sarbat Sehat Bima Yojana (AB-SSBY) scheme in the State of Punjab in August 2021, we have ensured that all claims have been processed and met compliance standards till the effective date of termination of the contract by the State Health Agency, Government of Punjab. We have settled all the claims arising out of hospitalization on or before the effective date of the termination of the contract and for which claims and appropriate supporting documents have been submitted to us. We have successfully fulfilled all our obligations under the contract during serving and post termination.”





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