Current Scenario
The
ESIC, created by an Act of Parliament in 1948, is the most important social
health insurance program for the organized sector working classes. It today has
an annual budget of over Rs. 10,000 crores and reserve funds of more than Rs.
25,000 crores[1].
With 151 hospitals, 32,349 hospital beds, 20346 medical personnel (7340
doctors) and 18,501 other staff and per insured
employee medical spend of Rs.2551 it is a huge medical establishment, somewhat
similar to the armed forces (38328 beds and Rs. 5914 crore medical expenditure
– Rs.19713 per employee) and Railways (13963 beds and Rs. 1370 crore medical
expenditure – Rs.9660 per employee).
Table 1 details ESIC expenditures over the last five years.
The
ESIS is not an ideally functioning social health insurance program (see the
story in Box 1). It looks huge in numbers with a coverage of 6.18 crore
beneficiaries with a per capita expenditure of Rs.1253 which is 2.5 times of
general government health expenditure for the same year. But it is not
universal access even for the organized sector employees; infact it covers only
42% of the organized sector employment and by design it is largely targeted at
blue collar workers thus fragmenting social security even in the organized
sector. While huge investments have been made in ESIS as evidenced by the
infrastructure and human resources for healthcare, all this is poorly
structured and managed. Despite having a robust hospital and clinic network the
utilization and occupancy rates are very low. One reason could be poor quality
of services (vacant positions of doctors and specialists are huge) and the
other a growing reliance on out sourcing to private practitioners and private
hospitals, especially the latter.
The
limited data available in the Annual Reports shows that outpatient care,
especially in larger cities where private practitioners called insurance
medical practitioners provide services the latter is used more frequently. For
instance in Mumbai which is the largest ESIS hub having the largest hospitals
in 2009-10, 52,203 outpatients were treated at ESIS facilities in contrast to
129,447 by private panel doctors and similarly for specialist care 48,557
attended ESIS facilities and 63195 attended private clinics. Increasingly
hospital care is also being paid for to use over 600 empaneled private
hospitals (reimbursed Rs. 180 crore in 2009-10) keeping the occupancy rates of
ESIC’s own hospitals below 50% (in the largest ESIS hospital, the 700 bedded
MGM hospital in Mumbai the occupancy was as low as 31%).
Anecdotal
stories tell us that the ESIC doctors are primarily used to obtain medical
certificates so that workers can access the various cash benefits under the
scheme. In 2010-11 there were a total of 406000 hospitalizations and 2.34
crores outpatient incidence (4.39 crore contacts). This seems to be a very low
utilization rate when compared with the NSSO morbidity surveys for the general
population. For outpatient care an annual incidence of 390 per 1000 as against
45 per 1000 for 2 weeks as per NSSO and only 6.8 per 1000 hospitalizations
annually compared to 26 per 1000 as per NSSO. Is this low morbidity and
utilization because of poor quality services or is it that the ESIS covered
population is healthier because it is well looked after? Or is it that even
ESIS covered persons are using the private sector and paying out of pocket? We
definitely need more evidence on this.
Table 1
Another
issue that emerges when we assess the information from the Annual Report is
that in the last few years, while the canvass of ESIS has expanded due to the
increase of wage ceiling to Rs.15,000 per month, the attention of ESIC is
moving away from the employee who has contributed from his/her wages to a new
arena of action – medical education. The ESIC Board has sanctioned 18 medical
colleges and 9 dental colleges besides 12 PG institutes. The establishment for
these is under full swing as can be seen from the increasing capital
expenditures coming from the reserve funds. Should a social health insurance
agency be entering the field of medical education? This is likely to further
damage the reputation of ESIS as well take it into a direction which will not
be in favour of the working class ( or is it that insured persons have been
promised a quota of medical seats!).
What
is also striking when we look at ESIC budgets is that even when the ESIC has a
huge surplus every year the state governments have to continue to subsidize
medical care expenses of ESIC from the general health budget. Thus in
2010-11the total medical care expenditure was Rs 2124 crores but more than half
of this, that is Rs.1294 crores came from the general health budgets of the
state and union governments.
What Needs to be Done
ESIS
is not a single isolated program. It is one important part of a compact of the
social security system within the country so it needs to be assessed in that
context. The few benefits that we have in India today are spread across various
Ministries ranging from administrative departments to Ministry of Labour,
Social Welfare, Social Justice, Women and Child Development, Ministry of Health
etc.. resulting in segmentation and fragmentation.
What
must also be noted is that the nature of social security provided varies a lot
for different sections of the population. At one end of the spectrum the civil
services employees of Central and State governments get a full range of
benefits as defined by the ILO. For instance, their retirement benefits alone
(pension, PF, gratuity etc.. excluding healthcare) were Rs.166,170 crores in
2010-11[2]
(as much as 2.11% of GDP). At another end are the below poverty line (BPL)
population who get adhoc benefits under various welfare and social assistance
schemes. For instance in 2010-11 such benefits across the country amounted to
Rs.146,248 crores or 1.85% of GDP (social assistance schemes/pensions for BPL,
SC, ST, nutrition, housing and labour welfare for unorganized sectors)[3].
If we include healthcare and water supply and sanitation this figure increases
to Rs. 248,456.22 crores[4].
Thus in the Indian context we need to differentiate these different benefits
that range from comprehensive social security (civil service employees) to ad
hoc social assistance programs targeted at different poor and vulnerable
groups.
It
is clear from budgetary allocations/expenditures that social security benefits
in India are highly discriminatory. Civil servants and defense services
employees as well as a small proportion of private sector employees, who anyway
benefit from their secure and well paid employment, have life-long social
security of a very high standard. On the other hand, those who struggle for an
existence all their life get ad hoc benefits from residual resources of the
budget, in most cases if they are below the poverty line, through a variety of
social assistance/welfare programs. Let us illustrate this with two contrasting
examples:
A person working with the Indian army retires in the
rank of Major and gets PF and gratuity totalling Rs. 20 to 25 lakhs as
retirement benefits. Then for life he gets half of his last drawn salary as
inflation-indexed pension, which today is over Rs.50,000 per month. If he dies,
his spouse gets a family pension of half that amount that is Rs.25,000 for her
life. Apart from this they have unlimited free healthcare, outpatient,
inpatient, dental, ophthalmic etc. In addition they get subsidized groceries
and all possible consumer products at subsidized rates through the canteen
services. They also get continued access to the mess and clubs so that they
remain socially connected to their “community”.
This is the best case scenario and about 15% of the households in India
have this kind or something similar as social security benefits earned from
their “organized” sector employment.
In contrast there is the BPL family of a daily wage
worker, whose daily wage depends on the market – if they are lucky they may
just manage to earn about Rs. 5000 for the entire household in a month. They
have access to education and healthcare services from government facilities but
there is no guarantee that they would get what they need and often they have to
pay for it. The children may not go to school because they may have to work to
sustain the family’s basic needs. They have no savings, PF, gratuity or any
other work related benefits. They have to continue working much beyond the
retirement age. If they fit the parameters then they may get a small sum of Rs.
200 – 500 per month as an old age or widow pension that is not indexed to
inflation. If both husband and wife are qualified to get old age pension then
only one of them will get it. If they are lucky they may have been registered
for RSBY or a similar health insurance cover so that if there is a catastrophic
illness their healthcare bill is atleast partly paid. This is the worst case
scenario with two thirds of the households in India experiencing an existence
of near about this kind.
The remaining 20% “middle” classes have to struggle
to make their own arrangements for social security through their savings,
extended family/community support – they did not get the organized sector
benefits and they are not eligible for the various social assistance programs
of state and central governments.
Given
the above political economy of social security in India the challenge is huge.
We are committing only about 6% of GDP for social security and over half of
this goes to the top 15% of India’s population.
In the last decade or so there has been a growing trend in committing
more resources to the remaining 85% of the population but this is being done in
a very ad hoc manner through targeted schemes where the focus of the target is
electoral catchment and not the development of a sustainable mechanism to
deliver basic social security. Under the UPA regimes the flagship programs have
basically tried to do precisely that and substantial budgetary allocations have
been committed but the approach has been very fragmented with the consequence
that outcomes in the form of improvements in for example the MDG indicators has
been poor. There is enough learning now that targeted and fragmented approaches
do not work and that universal access is the only way out.
Reforming
ESIS thus has to be viewed in the above context. ESIS, like any other social
security program in India is segmented through its design defect. While it was
supposed to be a benefit for the workforce, it got limited to only a small part
of the workforce because it limits extension of benefits to those earning a
specified wage (presently Rs.15000 per month or less) and are part of an
organization that employs more than 10 employees. Also its provisioning of
services are restricted to areas which have a certain minimum density of
eligible insured workers. The consequence of this is that only 3 percent of the
workforce (and less than half of the so called organized workers) become
eligible for ESIS benefits. Unless this design defect is not removed and the
scheme is universalized to cover the entire workforce (450 million) its
worthiness and effectiveness will remain questionable. The government is
putting huge efforts and resources at extending health benefits to the
unorganized sector through targeted and restricted schemes like RSBY and its
state clones using the route of private health insurance but all these efforts
fail to have the intended impact and end up benefiting the private hospitals
and the insurance companies. The ESIS benefit system which is otherwise well
formulated and is quite comprehensive can easily become the mechanism to expand
social health insurance to almost the entire workforce, and its integration
with the general healthcare services of the state can create a synergy wherein
the required resources can be pooled from employers and employees contributions
and that from tax revenues. Some suggestions
on how this could be done are given below:
Coverage: As an immediate step
the ESIC must amend the criteria that restricts coverage based on quantum of
wages and/or the number of employees of an establishment. The effect of this
would be that all employees of currently covered organizations would be
compulsorily covered. This would more than double the numbers covered by ESIS
but more importantly increase five to six fold the contributions from employers
and employees since the higher paid employees are presently exempt from ESIS
inclusion. As a next step ESIS should be extended to all employers from the
shopkeeper or household artisan who may be employing as less as one or two
persons – this would not be easy as registration of small establishments is
grossly inadequate. Further all self-employed persons (professionals, farmers,
artisans, vendors etc) should also be allowed as members into ESIS. To assure
equity employees earning less than Rs.10,000 per month (inflation-indexed)
should be exempted from contributions. Similarly, employers and self-employed
persons with a turnover of less than Rs.50,000 per month and/or income less
than Rs.15,000 per month must also be exempt from contributions.
Provisioning: The general primary
healthcare system and ESIS dispensaries (as well as other social insurance
scheme dispensaries/clinics, including of railways, defence services, CGHS
etc.) must be integrated into a common pool, including the empaneled private
practitioners (for whom much more effective regulation would be required).
Similarly, the ESIC hospitals need to be integrated with the general hospitals
of the public health system. All facilities must be well equipped and resourced
as per globally accepted norms (WHO, ILO etc.). The effort in provisioning must
be to make the primary healthcare system entirely through public provisioning
in the long run. Secondary and tertiary care is severely under-invested in
public domain presently and here regulated purchasing from the private sector
will be needed to fill in gaps. Further in both ESIS and general health
services human resources, especially doctors and nurses, are grossly lacking
and for this the creation of an IAS kind of cadre or something similar to the
cadre system in the armed forces would be needed. Infact there is a lot ot
learn from the armed forces and Railways health services in the matter of
provisioning, management and governance.
Financing: General taxation would
remain the main source for financing the entire healthcare system, but specific
to the ESIS system the pattern of contributions should continue with the
caveats mentioned in the paragraph on coverage above. With universal coverage
of all workforce there would be a possibility of reducing the proportional
contribution of employees since higher salaried employees from the CEO
downwards would all be covered – ofcourse the economics of this would have to
be worked out as the coverage increases. If even 50 percent of the workforce,
including self-employed are covered under ESIS then more than half the
resources needed for UAHC could come from social insurance contributions.
Governance: The ESIS is presently
an autonomous Corporation under the Ministry of Labour but under a UAHC
framework it will have to be merged with the governance mechanism designed for
UAHC. As mentioned earlier healthcare services cannot be seen as a standalone
service, it needs to be viewed as a compact of the social security benefits.
But this is complicated because ESIC and many other social security benefits
are under the domain of the federal government. Thus at the state level at best
ESIC facilities, which are physically run by the state government, can be
integrated for UAHC provisioning with the general health services to optimize
the economies of scale as well as integrate the under-used ESIS capacity and
over-crowding of many general public hospitals. Also other public sector
facilities like defence, CGHS and railways should also be integrated into a
common governance mechanism.
[1] For FY 2013-14 the
ESIC estimated income is Rs. 10,140.81 crores, Revenue Expenditure Rs. 7119.18
crores and Capital outlay of Rs 2504 crores (http://esic.nic.in/Publications/StandardNote190813.pdf)
[2] CAG 2012: Combined Finance and Revenue Accounts 2010-11: Volume 1,
Comptroller and Auditor General, GOI, New Delhi (Table 7 page 17)
[3] CAG 2012: op. cit. compiled from Vol 3
[4] ibid
