Thiruvananthapuram: The steep hike in the MEDISEP premium has moved the debate from discomfort to serious allegations of corruption, as hard numbers now reveal how an insurance–TPA model systematically drains public money while burdening employees and pensioners.
The premium has risen from ₹500 per month to ₹810 per month—an increase of more than 60%. For an employee or pensioner, this means paying over ₹9,700 a year, excluding GST. With lakhs of beneficiaries enrolled, the total annual premium pool runs into thousands of crores of rupees.
Official figures released earlier had shown that, in one phase alone, over 10.5 lakh claims amounting to around ₹1,900 crore were settled. These numbers are now being cited to justify the premium hike. But critics argue that this explanation is incomplete and misleading, because it hides where a large part of the money actually goes.
Under an insurance-based system, the entire premium is first transferred to an insurance company. From this pool, substantial amounts are carved out for administrative costs, insurer margins, and—most importantly—payments to Third-Party Administrators (TPAs). In a scheme of this size, even a modest per-member or per-claim fee translates into TPAs earning tens to hundreds of crores of rupees annually. Yet, employees are not told upfront who the TPA is, how much it is paid, or what incentives guide its decisions.
This is where allegations of corruption enter the picture. Employee organisations, pensioners’ forums, and governance experts allege that insurance is deliberately chosen not because it is necessary, but because it creates a fertile ground for commissions and rent-seeking. The TPA controls approvals, rejections, delays, and interpretations of “policy terms”. Each rejection or delay saves money for the system and strengthens the financial logic of the premium hike.
The logic of insurance itself is being questioned. Government employee healthcare is not an unknown risk. The number of employees and pensioners is fixed. Age profiles are known. Historical medical expenditure data is available. There is no catastrophic or unpredictable risk that requires transfer to a private insurer. Despite this, the insurance route is used—allowing private intermediaries to extract value from a fully predictable public expense.
What adds weight to the allegations is a comparison with other states. Except for Tamil Nadu and Kerala, most major states have moved away from direct insurance-company models for their employees. States like Telangana, Andhra Pradesh, Rajasthan, Karnataka and Haryana operate trust-based or government-controlled cashless systems, where the State itself holds the fund and directly settles hospital bills. There is no insurer pretending to “cover risk” that does not actually exist. As a result, there is no recurring premium renegotiation drama and no opaque TPA-driven denial economy at this scale.
Critics therefore describe the insurance approach followed in Tamil Nadu and Kerala as a “fake insurance” model—one where the language of risk cover is used even though the government ultimately bears the entire cost, while private TPAs and associated intermediaries make assured profits. In such a model, premium hikes are not an exception; they are an inevitability.
The contrast with ISRO’s CGHS-type system makes the issue even starker. ISRO provides cashless treatment through direct hospital empanelment and government settlement, without any insurer or TPA. There are no premiums collected from employees, no TPAs earning crores, and no yearly shock announcements of contribution hikes. This example demolishes the claim that insurance is essential for cashless healthcare.
Employees now ask pointed questions backed by numbers. If claims of about ₹1,900 crore were the issue, how much of the total premium pool actually reached hospitals? How much went to insurer overheads? How much to TPAs? What percentage of claims were rejected or partially paid? How many such rejections were later overturned? These figures have not been placed in the public domain.
The refusal to disclose these details has only strengthened the suspicion that the premium hike is less about healthcare inflation and more about sustaining a lucrative intermediary ecosystem. Pensioners’ associations argue that employees are being forced to fund a system where they pay more every year, while private TPAs quietly mint crores under the protection of political and bureaucratic silence.
With numbers now in the open, the allegation has gained legitimacy: this is not a failure of arithmetic, but a failure of governance. Until full disclosure is made—especially of TPA identities, payments, and claim rejection data—the MEDISEP premium hike will continue to be seen not as a healthcare necessity, but as evidence of a commission-driven insurance drama, where the public pays and private intermediaries profit.
The central question remains unanswered, and it grows louder with every deduction from salary and pension:
Why cling to an insurance model that benefits TPAs, when most other states have already accepted that government employee healthcare carries no real “risk” at all?
