Re-discovering the Employees State Insurance (ESI) Scheme in Post-Covid Times.
Conversation between Dr Sundara Babu (SB) and Prof T Sundararaman (TS)
Dr Sundara Babu is the coordinator of the ESI campaign committee of the Working People’s Coalition (WPC). Dr Babu has a Ph.D. from JNU and for the last 18 years, has been working with informal workers across the country. In the aftermath of the covid pandemic there has been an upsurge of interest in providing health rights with social security for the unorganized workforce. To sensitize about the ESI provisions and its possibilities, Dr Babu, he has been inviting Prof. Sundararaman to roundtables and workshops with various trade unions and worker collectives. These sessions have allowed them to study the ESI and engage with other academics and activists working in this area. In this conversation, they explore the amazing design and how the ESI was ahead of its time, the shortcomings in reform efforts, and ways to revitalize, strengthen expand the scope of this unique institution. Prof T Sundararaman is researcher-teacher-activist affiliated in the past to several premier institutions of India and has at least four decades of expertise on the subject of public health and health policy. He is coordinating the RTH Resource Collective which publishes these conversations.
SB: In our ongoing national campaign we have been highlighting the ESI architecture as an amazing one, which deserves to be universalised. Can we begin with a brief overview of why we agree why this is an amazing program and how it differs from other publicly funded health insurance, which otherwise are most often discussed in the context of road-maps to UHC.
TS: The ESIC could be called India’s earliest initiative of universal coverage dating as far back as 1948.Let’s highlight some of the remarkable design features of this “insurance system” that make it distinct from all others.
- First- it provides the largest medical benefits coverage that any insurance program provides, and it did so from its onset. All outpatient and in-patient healthcare needs are covered.
- Secondly, it provides a comprehensive set of cash benefits for social security, which is not even a proposed part of any other health insurance program.
- Thirdly it does all of this with one of the lowest premium rates of any of the insurance schemes and whereas all other government funded health programmes suffer from budgetary short-falls, the ESIC has a whopping 1.35 lakh crore surplus which is invested in deposits. And every year its income continues to exceed its expenditure.
- And fourth those eligible are entitled to these benefits as an entitlement assured by the ESI Act reflecting a rights-based approach. Those eligible are employees working in a wide variety of establishments with 10 or more employees and earning upto Rs 21,000 per month.
- And fifth, it was designed from the outset with many governance features which are only re-discovered and proposed as part of UHC reforms. These include
- a separate autonomous agency at the national level which exists in the form of the ESIC corporation and state level equivalent agencies
- Social participation in the form of tripartite structure that includes government, trade union and employer participation and this is institutionalized at national, state, and facility level.
- Federal structure- with clear roles for the state in healthcare delivery respecting the fact that health is a state subject, and transparent and fair financing mechanisms for state provided services.
- Inbuilt mechanisms of Provider-payment split- and performance-based payments and extensive use of strategic purchasing.
- Elaborate, effective grievance redressal system that includes appellate authorities and dedicated ESI courts
- Digitization of the entire operations and very good availability of granular data on outputs and processes.
While these efforts are not perfect, today’s designers of UHC should take note of our earlier, relatively comprehensive and successful attempts with ESI. Instead, many experts are either overlooking the ESI, pushing for its privatization, proposing its merger with PM-JAY, or abandoning it altogether. This paradox is compounded by civil society organizations advocating for universal healthcare but inadequately engaging with the ESI model. We risk losing an asset that we have not fully appreciated.
SB: I completely agree. And therefore, the importance of learning from ESI to understand how we move forward on universal health coverage. But one more initiating question. What is the political context? How did ESIC design come to have these advantages in terms of wider benefit packages?
TS: The ESI Act, passed in 1948 and predated the Indian Constitution, and was one of the first Acts of the Indian government. After the Constitution, the rules were framed and the scheme was formally launched by Prime Minister Nehru on February 24, 1952, in Kanpur. The ESI Act was driven by post-World War II welfarist commitment. In the 1940s the National Programme Committee of the Congress party had proposed a social security scheme.
In March 1943, B.P. Adarkar, a reputed economist and councillor, was appointed by the (British) Government of India to draw up a health insurance scheme for industrial workers. There was opposition, but BR Ambedkar the then Labour Minister’s strong public defence ensured that this decision prevailed. Ambedkar is quoted as stating “the maintenance of proper industrial relations is a public affair and is not a mere matter of contract between the employer and the employee.” The Adarkar Report was a work done in parallel to the Bhore Committee Report, and it was also very much influenced by the Beveridge Committee Report in the UK. Beveridge himself was approached but had declined. And Vallabhai Patel welcoming his views, would refer to Adarkar as the “Chota Beveridge”. [i] Due to various pressures, the ESI’s rollout was restricted to a small segment of organized industrial workers. Despite this, its vision was universal, its history and philosophy anticipating future concepts like health for all and universal coverage. And I think this is an important aspect to recall- how central the vision of ESI was to decolonization efforts and Indian independence.
[i] (Ravi Ahuja, A Beveridge Plan for India? Social Insurance and the Making of the “Formal Sector” IRSH
https://www.cambridge.org/core/journals/international-review-of-social-history/article/beveridge-plan-for-india-social-insurance-and-the-making-of-the-formal-sector, Cambridge University Press online, 2019).
SB: Let me elaborate what you began with by listing the benefits provided under ESI. The ESI’s medical benefits provides for all outpatient care, inpatient care of primary, secondary and tertiary care levels. It has very few exclusions. This is unlike PMJAY and other PFHIs which are largely restricted to hospitalizations. And unlike all PFHIs or even private insurance, there is no upper ceiling, there is no sum assured, there is no cap at saying that we can spend a maximum of five lakhs per person. Where ESI hospitals do not have the required care, patients can avail care from one of over 1000 empanelled private hospitals.
ESI also offers social security in the form of five major cash benefits for (i) sickness benefits, which is for compensating loss of wages expenditures due to sickness, which again no other insurance program does, (ii) maternity support, (iii) disability support, which again no other insurance offers, (iv) support for dependents in case due to a work-related injury or if a person dies on the job and (v) funeral expenses. And this is the sort of womb to tomb sort of commitment of early public welfare. Other sets of benefits called need based expenses include some benefits for rehabilitation post workplace injury, two other minor heads and two major unemployment benefits the Rajiv Gandhi Shramik Kalyan Yojna, and the Atal Bimit Vyakti Kalyan Yojana. [i] So you can see that it has covered all the required social security except pension and elderly care. That is a huge set of benefits. But what does it cost? And how is it paid for? Could you elaborate this please?
[i] Standard Note on ESIC, January 2023.
TS: So here is the most interesting fact: the government has a Zero budget for this scheme. The entire fund is based on revenue raised by ESIC and does not come from the general taxpayer’s budget. And this amount is raised as a premium paid by the employer and the employee. The premium was earlier 6.5% of the wages, with the employer paying 4.75% and employee paying 1.75% This has been further reduced because ESIC have generated a surplus that they are not able to spend. It is now only 4% of the wages with employer paying 3.25% and employee paying 0.75%. There is cross subsidy within but there is no government contribution into the budget.
And among the benefits, I think this is important to add in that ESIC extends “retirement medical benefits” to all insured persons, after retirement or if they have ceased working due to permanent disability, if these persons pay a token contribution of Rs 120 per year. Both insured person and their spouse are eligible for this medical coverage.
SB: The other relatively unknown feature of the ESI is its immense coverage. The scheme currently covers 342 lakh insured persons and about 1330 lakh beneficiaries, which is close to 10% of the population. (Annual Report 2023-24, ESIC at a glance pg. 5) [i] . It is no longer restricted to permanent employees. It covers all employees in all factories and establishments of all notified districts if the factories are non-seasonal and employ 10 or more employees. However, only employees who earn less than Rs 21,000 per month are eligible. The number of insured persons who are women is 67 lakhs which is only 19.5% of all insured persons.
However, this extent of coverage is recent. Coverage stagnated for my years. In 2005 the number of insured employees was a meagre 85 lakhs, which rose to 186 lakhs by 2013 and is now at 342 lakhs. The number of beneficiaries also rose in parallel. The number of factories covered rose from 2.48 lakhs to 6.6 lakhs in 2019 to 20.8 lakhs as of 2024. This is a huge increase, but in our understanding, this can increase much further. But can we understand why ESI coverage was stagnant for all those years and then what changed in 2005?
[i] ESIC Annual Report 2023-24, ESIC at a glance pg. 5
TS: The common explanation for the ESI’s limitations is its focus on the organized sector, but this is an incomplete and misleading response. Initially, ESI was restricted to a few districts, and expansion is still incomplete. The scheme covers 492 districts fully, is partially implemented in 118, and not at all in 134. This delay in its geographic expansion was partly due to limitations of building and ensuring local capacity, though cash benefits required little infrastructure, and even medical services could use public hospitals. The real issue likely lies in industrialist resistance, which started in the 1950s and has kept ESI coverage minimal. By 2005, fewer than 100 districts were covered, and while geographic coverage has improved dramatically thereafter, much remains to be done.
Another reason was the limited definition of what is an industry and what is an organized worker. It took decades for the government to expand the definition to include motor road transport, hotels, cinemas, newspaper establishments, shops, private medical and educational institutions. Even now there are significant exclusions. The coming of the social security code left it to the states to decide on what workplaces to include under the coverage, and there is much variation across states. But again, we can safely assume that the current coverage could be doubled if more workplaces can be brought into the net- and again there is no real reason for not doing so.
Third was the very restricted definition of the employee. Post-2005, contractual and casual labour in the central government and the organized manufacturing sector were included, significantly increasing the scheme’s coverage. Most manufacturing workers are now contractual and paid daily. Despite this, many states only cover permanent employees, leaving contractual workers without social security, even where government is directly or indirectly the employer without social security cover. There is no reason for example why all municipal and panchayat workers, including daily wagers are not part of the ESI coverage.
Finally, coverage has always been limited by salary caps. The most recent increase was in 2015, when it increased from Rs 15,000 pm to Rs 21,000. Even this is conceded as very low and there are moves to increase it to Rs 30,000. But let us reflect, that the first salary cap introduced in the fifties was put at Rs 400 to Rs 800 which was the equivalent of the monthly salary of the District Collector. If that is the rationale, the salary cap should be as high as Rs 100,000 per month now. And there is no rational reason why this cannot be so. In the insurance business restriction to low incomes is adverse selection and inclusion of higher incomes is welcome. The only reasonable explanation for this was the desire to push the salaried middle-class income to private purchase of healthcare.
Now, from 2005 thanks to the resurgence of interest in state role in the provision of welfare, and in 2010 with the call for Universal Health Coverage, there was a pressure on this system also to increase coverage. So, from 2005, we see increases in geographic areas, occupational groups, types of workers and income ceilings.
SB: Yes. The coverage can be greatly increased in the formal sector and the WPC stands for extending coverage to the informal sector as well. But before that, you were referring to a revenue surplus? How is this possible, what is its extent? Is ESIC charging too much premium?
TS: Not at all. In fact, this 4% is the lowest most premium almost anywhere in the social insurance scenario, and a number of countries have their health systems based on social insurance. And 4% of a 21,000 monthly salary is Rs 9840 per year, which is considerably more than other PFHIs, but most wages are much less than this and therefore premiums are ever lessor. Despite this in 2023 the total incomes were Rs 17403 crores and the expenditure including all claims paid and administration was only Rs 14410 crores, (of these 11,600 crores went to medical benefits and the rest to other cash benefits). That is a surplus of 2993 crores in just one year. (ESI Annual Report ,2023-24).
Cumulatively as of March 31st, 2023, the ESIC had an investment of 1,35,998 crores, of which 115,101 was with investment portfolio managers and 20,885 crores were special deposits with central government.
In our contention the central problem of the ESI is the very poor disbursal of the benefits or in other words a reflection of our relatively poor delivery of services.
SB: This is not the perception within ESIC. They point to a rather large institutional framework for the disbursal of medical benefits which accounts for 80.5% of the benefits. There are 53 hospitals directly under the corporation and 108 hospitals under the state ESI control. There are also 1574 dispensaries. In addition, the ESI can and does liberally refer patients to over 1000 private hospitals and reimburses these hospitals at largely satisfactory rates. It has also contracted 927 insurance medical practitioners at the primary care level. For disbursal of cash benefits, there are state offices and 96 district cash disbursal offices (DCBOs) each of which caters to a cluster of districts. So, what explains the failure, or should we go by what ESIC believes- that there is no failure here.
TS: I think we must begin by acknowledging that this infrastructure is delivering a huge volume of services and benefits and we would certainly be much worse off without it.
But look at the NSSO data and ILO study on medical benefit utilization. In the NSS 75th round survey only 1.03% of the households report having an ESI coverage, over 10% and about one third of those who had a card and experienced hospitalization faced catastrophic health expenditure (CHE-10) about the same as private insurance but less than PFHIs or if there was no cover. [i]. In the ILO study, you find that utilization of any outpatient care for an illness varies across states from 94 % in Tamil Nadu to 10% in Jharkhand, but of these only one in four availed of benefits under the scheme. The pattern for hospitalization was similar. Beneficiaries ended up paying barely Rs. 2,426 for an episode of in-patient service at ESIC facility as against Rs. 34, 372 when beneficiaries sought treatment from the private non-empanelled hospital to which they were referred. Only about half the patients were satisfied with the medical care provided. [ii]
The reasons are many. There is very poor awareness of being registered for ESI and what this means.
Premiums are deducted by the principal employer, and paid to a labour contractor, who then passes it onto a secondary labour contractor, who passes it on to a third level labour contractor, who is little more than a coordinator of a group of 10 to 20 labourers. Knowledge of the deduction of premiums, how to register and what entitlements flow with registration are seldom communicated.
Even if they have a card, the place where care is available is not proximate, because care providers are few, and the eligible working population is dispersed. This is particularly a problem for primary healthcare, which constitutes over 70% of healthcare needs and requires being accessible, close to communities. In practice comprehensive primary care is available only in the outpatient of the ESI hospitals. The dispensaries are few- about one per 80,000 against one per 5000 required, and too far away. Also, it is almost impossible for a poor labourer to figure out the most appropriate site of care for his healthcare needs and there is no easy guidance available. To sum up, I think there is a major failure in the way care is organized, information about the benefits is communicated and therefore the delivery of the medical benefits is far below.
Utilization of ESIC hospitals is high where they are nearby and offer comprehensive care, but this covers only a small portion of medical needs. Some ESIC hospitals suffer from poor functioning, often due to inadequate state attention. ESIC-managed hospitals generally perform better, though this isn’t always the case. Upgrading and running multi-specialty hospitals requires specific management skills that labour ministries may lack compared to mainstream departments. Current management practices and senior leadership perspectives favour outsourcing care, but the high differentials between Out-of- Pocket Expenditure (OOPE) in such outsourced and in-house care suggests a need to reconsider this approach.
[i] (2019): NSS 75th Round-key Indicators of Social Consumption in India: Health, National Sample
Survey Office, Ministry of Statistics and Programme Implementation, Government of India, New Delhi, viewed on 6th August 2024, http:// www.mospi.gov.in/unit-level-data-report-nss- 75th-round-july-2017-june-2018-schedule-250d social-consumption -health
[ii] International Labour Organization, Accessing Medical Benefits under ESI Scheme, Demand Side Perspective. 2022
SB. You have covered the reasons for poor delivery of medical benefits. But cash benefits are also important. For every single cash benefit there are clear cut rules on eligibility and quantum of compensation linked to number of days of services and their current wage earning level. ( see Standard Note on Employees’ State Insurance Scheme, as of 01.01.2023, published by ESIC, pages 3 to 7) These are flexible enough to ensure that contractual labour and daily wage labourers also do not get excluded. We also know that of the Rs 2810 crores of cash- benefits, disbursed in 2022-23. Are these good performance figures? What is the situation regarding the delivery of cash benefits linked to social security? Are those entitled to these benefits- and who have literally pre-paid the costs able to access these benefits.
We have very little evidence on this question. Neither NSSO surveys nor the ILO study addresses this, and I know of no other equivalent study of beneficiaries. There is some information available in the annual report of 2023-24 in appendix VA and VB, and these would at first glance indicate that the delivery of these benefits is also very low and further that in some regions it is dismal. To give an example for only 0.09 cash benefits per employee per annum (about one in 10) got any cash benefit during the year. But utilization of data has many problems. We need well designed, periodic beneficiary surveys that capture unmet needs to be able to fully comment on this.
To sum up, we have a situation where deduction made in the wages of very poor people by both the employer and the employee are deposited in a safe place but the benefits that this premium guarantees are not being delivered. This is not a happy situation or something that we can live with.
SB: In my experience there are other problems too. Timings of the facilities are not convenient, especially when seeking care for chronic illnesses. There is considerable paper work and unfamiliarity with the stems which the labourers cannot manage and there is no support. There is bureaucracy and corruption. But I also suspect that there is an inherent reluctance to grant these benefits to the workers. Despite their payment of premiums, giving these benefits is seen as charity- and that partly explains why those with higher salaries are excluded. There is one absurd rule, that if during the course of the year, an employee gets a wage rise to above Rs 21,000 per year, then his ESI benefits stop with immediate effect. But I would like to get your perception of how the government is addressing the problem of surplus funds and poor delivery.
TS: The government has been aware of this problem for at least two decades, with two rounds of reforms and numerous parliamentary committee reports. However, there are two main issues in their approach.
First, the failure to link the large surplus funds with poor delivery of benefits. The ESI is accountable for providing benefits to all who seek them, but if care seeking itself is low, it’s not seen as their problem. The surplus funds are treated as a separate problem, leading to measures like reducing premium collections and considering exemptions. Further these surplus funds are being invested with portfolio managers so as to generate higher investment returns. This is better than an earlier attempt where they decided to invest the surplus in capital investment to build a whole series of 16 medical colleges. A few years later a lot of leakages were found in this capital expenditure and the ability to run so many medical colleges was not there. So, they cut back to 6 medical colleges. And that entire amount was sub-utilized and really was a wasted opportunity. Currently, they are investing some of the surplus in a major expansion in hospital capacity, which is good. But it will not really solve the problem.
When it came to improving delivery of medical benefits, the poor services were attributed to the inherent problems of public providers. The solution was sought in shifting to purchasing care from empanelled private hospitals. This may have increased access to tertiary care but did not ensure financial protection and proved cost ineffective to in-house care as volumes grew. Suggestions were made to transfer this outsourcing function to PMJAY and the NHA due to perceived inefficiencies in ESIC’s management. A pilot program in about 60 districts is ongoing, but its success is doubtful. Unfortunately, premature scaling up might follow, reflecting past neoliberal reform experiences.
Advisors of this approach may overlook that there has always been a split between the payer (Finance Commissioner) and the provider (Director General of Medical Services). Payments to states for medical benefits are capitation-based on an estimated value per insured person (currently Rs 2600 per person annually, with an additional Rs 200 for digitization and another Rs 200 for supporting a strengthening health services plan). There are also performance incentives for higher bed capacity utilization. A medical board decides on packages and rates, a system established well before PMJAY, with a better track record.
No doubt there are problems, but the merger with PMJAY and a more purchasing based instead of public provisioning-based approach may be only a case of going from the frying pan into the fire.
SB: Many of these reforms were perhaps inspired by external consultants hired through BMGF in the year 2020. But what about the more conventional reforms that parliamentary committees have been proposing? [i]
[i] Standing Committee on Labour, 16th Lok Sabha, Ministry of Labour and Employment, Action taken by the Government on the Observations/Recommendations of the Committee contained in their 39th Report : “Employees’ State Insurance Corporation Establishments, Recovery of Arrears and Functioning of the Hospitals and Dispensaries under the Scheme;” Presented to Lok Sabha on 12.02.2019
TS: These parliamentary recommendations are worth noting, both because they show the seriousness of the political process in strengthening ESI functioning and because such efforts were sub-critical to turning it around.
One set of recommendations dealt with improving the hospital infrastructure, filling up vacancies in the human resources, especially specialists, and improving availability of medicines and upkeep of the facilities. Noting the difference between income and expenditure the committee called for enhancement of the quantum of some of the benefits and establishment of dispensary cum branch offices (DCBOs) that will facilitate disbursal in all districts. Five years later there are 96 districts with DCBOs.
The other concerns of the Parliamentary Committee have been in increasing the coverage and revenue collection. More than 50% of eligible employees and employers have not yet been enrolled and this has to be prioritised. Further many employers have not paid premiums. In many cases this has to be written off, but there is also much that can be done to improve revenue collection, and this too is being pursued. The Committee held that ensuring regular payment of premiums is also an ESI responsibility and cannot be left to the employers’ discretion.[i]
SB There is a strong view expressed that the main problem in delivery is the lack of interest shown by state governments? But health services delivery by states was part of the original federal structure of the constitution. Should we re-think this?
TS: There is some truth in this, and this is a known perception at the higher levels of governance. But remember, that if ESIC were to centrally manage all the facilities, it will have the same problem of inefficiency. Further in most states it is the labour ministry that manages the medical services through a directorate, which is often not in tune with modern organization of health care. These are medical professions turned administrators who have grown within the department with a very limited set of exposure and are not part of the larger debates on UHC, primary healthcare, modern hospital administration, quality assurance systems, hospital information systems etc. Not only hospital administration, the basic modern understanding of primary healthcare is also very weak. Take for instance the fact that ESIC still runs dispensaries and not primary care centres. And then for recruitments or procurement or infrastructure development there is a bureaucratic cobweb of rules that act as a constraint. These problems need to be attended to, but weakening the federal structure is unlikely to help.
SB: We know that many things are being tried to strengthen ESI: wider coverage, better revenue collection, strengthening infrastructure, filling up vacancies, digitization and even purchasing care as required to fill gaps. But is there anything that is completely missed in these proposals? Something that is the critical step to improving the delivery of benefits, which we agree is where the heart of the problem lies?
TS: The primary gap is in primary health care, crucial for prevention and health promotion. Our main demand should be the appointment of one Community Social Health Worker (CSHW) for every 1000 insured persons, covering about 4000 beneficiaries. These CSHWs would inform families of their entitlements, guide appropriate care seeking, and help them access benefits. For 342 lakh insured persons, this requires at least 34,200 CSHWs. Given geographic dispersion we could even plan for 50,000 CSHWs. Their tasks would include health education and ensuring no one misses out on cash or medical benefits due to lack of knowledge or support.
Secondly, the current ratio of one dispensary per 80,000 beneficiaries should be reconsidered. Increasing dispensaries may not help much except in areas with high concentrations of insured persons. Some states have tried contracting private general practitioners as insurance medical practitioners (IMPs) for primary care like UK NHS style. However, many IMPs focus more on writing sick leave and prescriptions rather than comprehensive primary care, due to limited services, weak linkages, and the absence of a primary care team, unlike the UK model.
The way forward is to link with designated Health and Wellness Centres, certified and supported to be fully functional, which would be expected to provide comprehensive primary care. This ensures access to primary care teams, medication, and follow-up care for chronic illnesses like hypertension, diabetes, chronic respiratory disease, and occupational disease. Upon ESI registration, workers should receive a health checkup and be linked to a primary care provider by name and phone number, who will contact them quarterly to ensure they receive their services package. They should be educated about their entitlements and assisted in accessing services and cash benefits. If CSHWs are in place, this is easily achievable. In case of a family death, the provider should ensure funeral benefits are processed. Accountability for delivering entitlements is crucial, especially for illiterate and poor workers, requiring increased awareness and access to benefits. Annual check-ups and follow-up medication can be reimbursed by ESI.
The third major demand should be for establishing a primary care centre in the workplace. Mortality figures (from many places where I have had occasion to look at), show a high excess mortality in men of working age-almost all of which is preventable. Mortality in men may be three to 15 times that of women, and this is more so in those who are in the labour force. There are very interesting experiments like that of Healthsprings occupational health programme in Mumbai, which we could learn from. It would involve health checkups and some level of environmental management. I’m going to give this whole occupational health aspect a pass now in this conversation, which is already too long.
SB: In that case, does the CSHW role extend to cash benefits as well? An additional 50,000 CSHW workforces would cost an additional 600 crores per year.
TS: Yes, the CSHW facilitation and educational role should cover cash and medical benefits as well as ensuring that beneficiaries access the right facilities at the right time. As pointed earlier, in the current annual income and expenditure pattern these 600 crores is already available. Remember that the public health system has introduced an ASHA for every 1000 beneficiaries and in tribal areas even for 300 to 500 beneficiaries. Even in the PM-JAY a cadre of Arogyamitra has been introduced in every empanelled facility and in some states, this means one in every PHC. Without this the necessary utilization would not have been achieved. In most insurance contracts, the insurance agency aims to achieve at least 90% claims ratio, failing which they have to pay back the surplus. So this is not a new idea, and its necessity is well established.
SB: Next, coming to issues of governance. There is a considerable space given for the trade union participation in the ESI governance structure. There are trade union representatives in the National Committee, in the State Committees, and in the facility level. And from a trade unionist perspective I am concerned that this has not been very effective. What can be done for a greater engagement with the public?
TS: From my interviews, the sense I get is that at the facility level, it works and provides some degree and local problem solving at facilitation. But not at other levels. One retired administrator gave an example: “when we were saying we will build all these 16 medical colleges, they said, “Yes, we approve”. And then when we said we should not build these medical colleges, they said again, “Yes, we approve”. Trade union inputs are very limited to certain supply side demands. But in terms of the organization of care or policy issues, their voices are very weak.”
I would call for much more informed civil society and academic participation, which also sensitizes the labour unions to the role they can play. There are very few studies of the ESICs. There are many internal consultancy reports which guide reforms that are never in the public domain and these may well be part of the problem rather than the solution. I think that the public health community and civil society active on health issues have a much bigger role to play than they have played so far. And there is an urgent need for public discussion that goes beyond merely giving voice.
We also agree that trade unions can play an immense role in building awareness in workers of their rights under ESI and the social security codes and in proactive facilitation to ensure that registered employees secure their benefits. This role of trade unions mobilizing workers for insurance has historical precedence in the role played by trade unions in the sickness funds of 19th century Germany, one of the most important milestones in the development of public health systems. An active institutionalized link of trade unions with the proposed CSHWs and the DCBOs can help ensure this link and should be part of our re-imagining the future of an universalized ESIS.
SB: So when you emphasize the role of the public health community, do you think there is a value for social audits and public commissions or hearings? Would these help?
TS: Social audits will definitely help, but there must be a theoretical space opened up. We say in medicine “that the eye cannot see what the mind does not know.” Unless there are viable alternatives introduced into the discourse, the imagination will remain limited. Many limitations are perceived as inherent. All talk of innovations tends to get equated with market-based innovations, which have been tried and do not work. They have not really thought of innovation, which can be done in the public goods understanding. So, while social audits will help, we also need a much richer discourse about the problems and alternatives and cross learning across the sector. One of the interesting frontiers of ESI reform, is in digitization. Again, they are not learning from the errors that have happened elsewhere. There is this perpetual quest for a next generation of patient ID, but no basic questions asked as to whether that is really the bottleneck and why earlier IDs have not been adequate. I think that somewhere it is also a failure of the public health community and of theory, not only the failure of the trade unions and the failure of government or political parties.
SB: We have discussed the social protection context. But there’s also the other dimension of occupational safety and health. How do you look at this challenge?
TS: There have been some major initiatives made, but overall there is still much neglect and disconnect. Much of the preventive and promotive parts of occupational health are to be addressed in the Social Security Codes and the Factory Act and factory inspectors. But this requires active feedback from the clinical side. The ESI providers’ role is not just to treat occupational disease, but also to alert the factory inspection system to prevent occupational ill health. For example, an ESI care provider should be able to link hearing loss in his patient to a noisy workplace and then feed back into preventing that. Such links are not established. The workplace is also not conceived as a venue of primary health care. What we have now is a few hospitals that treat occupational disease when patients are diagnosed and seek care for the same. This is a welcome development, but it is not enough. However, I am afraid we would have to leave this topic for another conversation.
SB: So you know that as part of this campaign, we are asking for universal coverage. I note that you have made three important recommendations to improve coverage in the sectors covered so far. These are to universalize coverage to all districts, remove the salary cap on eligibility, and and improve registration of all those who are currently eligible. But what about the unorganised, informal and self-employed sectors. How can they be brought in, even when there is no discernible employer. This demand is the focus of the WPCs campaign and what we are working for.
TS: I think such inclusion is possible and desirable. Sometimes there are pushbacks from the organized workers because they’re worried that if the unorganized worker comes into it, it will decrease their access. But that is not a real danger. It is more likely to strengthen the program. Remember also that this is the only insurance programme that offers social security benefits including cash benefits for loss of wages due to illness, a matter of great urgency to the self-employed, as we learnt so bitterly from the Covid 19 experience.
The first principle is that social security protection via ESI is every worker’s right, whether organized, unorganized, self-employed, or formally employed. The focus should be on how to deliver this protection, not whether it can be extended to unorganized workers. The longstanding excuse that unorganized workers cannot be covered is not a valid reason. A closely related principle is that of solidarity, where premiums are in proportion to ability to pay, but benefits are according to needs
Currently, some workers have employers who do not pay premiums, but formal registration is required. In such cases, employee associations could act as proxy employers. For example, auto drivers’ or rickshaw pullers’ associations could handle registration and a nominal levy, with the government providing a cross-subsidy. For instance, if a rickshaw puller earns about 100 rupees a day, the government could contribute Rs 3-4 monthly. Cross-subsidies are common in countries like Germany and Japan.
Domestic workers’ unions should require registration and employer contributions, similar to developed countries. If hiring a domestic worker, employers should pay a minimum wage and a contribution. If enforcement is challenging, the Domestic Workers Association could act as the proxy employer, with employee contributions as a membership token to extend benefits.
There is no doubt that extension of social security benefits to all unorganised workers would require considerable public subsidy. But, If medical benefits are primarily provided through public health services, the main additional cost is the cash benefits of social security. PMJAY and many state insurance schemes already cover those earning below Rs 18,000-25,000 per month, so reimbursement to facilities can come from ESIC, public health insurance, or government health budgets. This approach extends other social security benefits as part of the package, as seen in Thailand and historically in trade unions and national insurance systems.
The Social Security codes allow states to decide which worker categories to include and how to include them, providing an opportunity to work with progressive state administrations to extend coverage to informal workers. This approach is feasible and has been implemented elsewhere. As we aim for a 5 trillion economy, universal access to social security rights should be inherent in ESI’s design.
SB: So let me sum up the recommendations we agree upon.
The first set of recommendations are measures to improve coverage of the categories of workers who are already covered by ESIC, and in parallel to extend coverage progressively to other so-called unorganized and informal workers also. These measures include raising and removing the salary cap, better registration of employers and employees, extension to all districts while retaining the current levels of premium payment. It is worth noting that the current government may be in tune with these recommendations and already advancing in this direction.
The second set of recommendations pertain to better delivery of medical and cash benefits, so that the entire premium collected is used for providing benefits. Here the government moves slowly with greater emphasis on outsourcing to the private sector than public provisioning and we are cautioning against this trend. There could be limited private sector participation, but with effective gatekeeping to ensure that referrals are necessary, and that patients are not charged or made to buy the medicines, diagnostics etc. There is an urgent need to professionalize management of ESI facilities. We also call for sweeping changes that bring primary health care approach into play and this includes the introduction of a large cadre of community social and health workers- somewhat like the ASHA and the Arogya Mitra.
My closing question to you, is how optimistic are you of such changes and what would be the grounds of optimism?
TS: While there is a constant danger of privatization leading to the loss of even what little we have, on the other hand there are also pressures to universalise social security. Policy makers are seriously talking about universal basic income. Could we have imagined this a few years back? Why can’t we talk about Universal Social Security as a basic right and something that is achievable? If governments can provide income without employment, why can’t governments provide employment with social security!!. Increased public expenditure is not the only reason for government reluctance. The resistance to universal social security also comes because in a market economy, capitalists see an advantage in maintaining a large reserve of unemployed or precariously employed workers. But trade unions and democratic forces resist this, and one form of resistance that it can take is for trade unions and civil society to take organized efforts to ensure that that the medical and cash benefits are delivered as promised and increasingly all working men and women are registered under one or other form of social security that assures this. There is a tipping point for change to happen. I don’t think the time has yet come for this idea, but we’re getting there.
Acknowledgements: Ms Roubitha David for the transcription, Dr Shalini Singh for editing, and Ms Riya Raghunath for the front-page illustrations..
About the Author/Participant: Dr Sundara Babu is a PhD in political science from Jawaharlal Nehru University in Delhi, and for 18 years has been working with agricultural workers, domestic workers and sanitation workers. He is coordinator of the campaign for ESI is part of our larger campaign on social protection for all workers, conceived and is being led by the platform called Working People’s Coalition (WPC). Started in 2013, the WPC expanded to 300 organizations across 14 states post covid 19. The campaign to save ESI is part of WPC’s larger mission on social protection for all workers, which essentially focusses on the informal sector workers.
References:
[i] (Ravi Ahuja, A Beveridge Plan for India? Social Insurance and the Making of the “Formal Sector” IRSH
https://www.cambridge.org/core/journals/international-review-of-social-history/article/beveridge-plan-for-india-social-insurance-and-the-making-of-the-formal-sector, Cambridge University Press online, 2019).
[ii] Standard Note on ESIC, January 2023.
[iii] ESIC Annual Report 2023-24, ESIC at a glance pg. 5
[iv] (2019): NSS 75th Round-key Indicators of Social Consumption in India: Health, National Sample
Survey Office, Ministry of Statistics and Programme Implementation, Government of India, New Delhi, viewed on 6th August 2024, http:// www.mospi.gov.in/unit-level-data-report-nss- 75th-round-july-2017-june-2018-schedule-250d social-consumption -health
[v] International Labour Organization, Accessing Medical Benefits under ESI Scheme, Demand Side Perspective. 2022
[vi] Standing Committee on Labour, 16th Lok Sabha, Ministry of Labour and Employment, Action taken by the Government on the Observations/Recommendations of the Committee contained in their 39th Report : “Employees’ State Insurance Corporation Establishments, Recovery of Arrears and Functioning of the Hospitals and Dispensaries under the Scheme;” Presented to Lok Sabha on 12.02.2019
[vii] Ibid
About the Conversations on Health Policy:
These conversations are published by the Right to Health Resource Collective with a periodicity of one or two month. This is the 13th conversation of this series. Each of these ‘conversations” explore various problematics which are central to the practice of public health in India and in developing countries. For accessing this and earlier conversations please visit:
