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The central lesson to be learned from studying the case is to understand the challenges and constraints posed by contextual conditions in designing contracts in public–private partnerships (PPP) for financing and delivering health care in emerging economies such as India.

Perverse incentives, along with contextual conditions, led to extensive opportunistic behaviors among involved agencies, limiting the effectiveness of otherwise highly regarded innovative design of the program.

India’s “Rashtriya Swasthya Bima Yojana” or National Health Insurance Program, launched in 2007 provided free health insurance coverage to protect millions of low-income families from getting pushed into poverty due to catastrophic health-care expenditure. The program was implemented through a PPP using standardized contracts between multiple stakeholders from the public and private sector – insurance companies, hospitals, intermediaries, the provincial and federal government.

Teaching Notes are available for educators only.

CSS: 10 Public Sector Management.