Saving the Employees' State Insurance Scheme

The central government seems to be moving towards dismantling the most important social health insurance programme for the organised sector working classes, the Employees' State Insurance Scheme. The government is extending health benefits to the unorganised sector through targeted and restricted schemes 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. Serious efforts must be made to iron out the design defect in the Employees' State Insurance Scheme and universalise it.

In his 2015–16 budget speech Union Finance Minister Arun Jaitley while acknowledging that the Employees’ State Insurance Scheme (ESIS) is not functioning well and is riddled with problems said, “With respect to ESI, the employee should have the option of choosing either ESI or a health insurance product, recognised by the Insurance Regulatory and Development Authority (IRDA). We intend to bring amending legislation in this regard, after stakeholder consultation.”1 This is a clear attempt at destroying an otherwise excellent health security system and links to the boost in the budget for the insurance sector by increasing substantially the tax rebate for payment of insurance premiums from Rs 15,000 to Rs 25,000 and Rs 30,000 for senior citizens. The latter is also a message for the aam aadmi (common man) to take care of his/her health needs by buying health insurance. The government does not intend to provide it. Thus we also see a huge cut in healthcare budgetary allocations from Rs 39,231 crore to Rs 33,260 crore, a sharp decline of 15%, actually much more in real terms if we factor in inflation.

The Employees’ State Insurance Corporation (ESIC), created by an act of Parliament in 1948, is the most important social health insurance programme for the organised sector working classes. It has an annual budget of over Rs 10,000 crore and reserve funds of more than Rs 25,000 crore.2 With 151 hospitals, 32,349 hospital beds, 20,346 medical personnel (7,340 doctors) and 18,501 other staff, and with a per insured employee medical spend of Rs 2,551 it is a huge medical establishment, somewhat similar to the armed forces (38,328 beds and Rs 5,914 crore medical expenditure of Rs 19,713 per employee) and the railways (13,963 beds and Rs 1,370 crore medical expenditure with Rs 9,660 per employee). Table 1 (p 18) details the ESIC expenditures over the last five years.

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