Future of MEDISEP in doubt as government withdraws support; Insurance contract renewal uncertain

KOCHI: The future of the MEDISEP health insurance scheme, which benefits over 30 lakh individuals, including government employees and pensioners, is now uncertain as the state government has announced it will no longer take responsibility for the scheme. With only nine months remaining on the contract with Oriental Insurance Company, no decision has been made on how to move forward.

The government has collected ₹600 crore each year from employees and pensioners to fund the scheme. However, Oriental Insurance is now facing claims amounting to ₹700 crore annually, leading the company to request an increase in the contract amount. Despite this, the tender process for renewal has not yet begun. The government is reportedly considering a return to a reimbursement-based system, but no final decision has been reached.

Currently, MEDISEP covers 145 government hospitals and 408 private hospitals. However, there is growing criticism of the quality of care provided by many of the accredited hospitals. Many top-tier private hospitals are not part of the list, and numerous complaints have been raised about the non-receipt of claims.

One major issue is the alleged practice by some private hospitals of inflating treatment costs, prompting further scrutiny. Meanwhile, the Finance Department has yet to initiate the tender process, citing these ongoing concerns. Oriental Insurance has proposed increasing the monthly premium from the current ₹500 to ₹700 per beneficiary to offset rising costs.

So far, ₹1,485 crore has been paid out in claims, with around 5.52 lakh government employees and 5.87 lakh pensioners currently covered by the scheme. There are also widespread complaints that insurance companies are not covering the full cost of treatments, leaving patients to cover the shortfall. As a result, many hospitals are hesitant to join the scheme due to what they consider inadequate reimbursement rates set by the insurance company.