This paper studies how publicly financed health insurance can become counterproductive, ushering in unnecessary medical procedures with adverse health consequences. Using the National Family Health Survey (2015-16) data, we show how a health insurance scheme providing tertiary care coverage led to higher rates of hysterectomies. Most of these unnecessary treatments were performed in private hospitals, where providers have incentives to file more claims under the scheme. We also find evidence that women who underwent hysterectomies were more likely to face domestic violence by their partner at home. Our results motivate the need for audits and monitoring under health insurance programs without co-payments, especially for private hospitals.