[dropcap]I[/dropcap]NDIA has a workforce of about 54 crore people. Most of them are in the unorganized sector, devoid of any social security benefits. Those in government departments and public sector enterprises, who are covered under social security, are only about 3%. Among the rest of the workforce, a small number are in the formal economy and the vast majority of 93% are in the informal economy. Other than government and public sector employees, only about 11% of the total workforce is covered under social security schemes.
The Employees’ State Insurance Scheme (ESIS) is a multidimensional social security scheme meant to provide socio-economic protection to employees in the organized sector in the event of sickness, disablement and death due to employment injury and to provide medical care to insured employees and their families. The scheme provides full medical care to the employees registered under the ESI Act, 1948 during the period of their incapacity, restoration of health and working capacity. It provides financial assistance to compensate for the loss of their wages during the period of their absence from work due to sickness, maternity and employment injury. The scheme also provides medical care to their family members.
The ESI scheme is different from any insurance scheme as it covers medical, retirement, sickness, disablement, dependent, maternity and confinement benefits, funeral expenses, unemployment allowance and vocational rehabilitation allowance. It covers OPD care to inpatient care to post-hospitalization expenses. No insurance scheme gives so much coverage. The ESIC could be a guiding scheme for the government where it is directly involved in healthcare at various levels.
It is unfortunate that the Union Government has been initiating “reforms” in the ESI Scheme without differentiating between “health insurance” and “social security”.
The ESIS is based on contributions by the employers to the amount of 4.75% of their wages and the workers to the amount of 1.75% of their wages. With effect from July 1, 2019, the rates of contributions to ESI Scheme will be reduced from 4.75% to 3.25% of wages for employers and from 1.75% to 0.75% of wages for the workers, according to the Ministry of Labour and Employment.
Huge reserves due to underutilization of funds
The logic given by the government behind this reduction in the contribution is that they have accumulated huge reserves out of this scheme. This, however, needs to be studied on the basis of facts. During the period from 2014 to 2019, “non-earmarked reserves” grew from Rs15,650 crore in March 2013 to Rs.68,292 crore in March 2019. The reserves have accumulated because of the increase in the income ceiling for coverage under ESIC from Rs 15,000 to Rs 21,000 per month in January 2017. This added to the number of workers covered under the scheme, and therefore the contribution amount. The other reason for the increase in the reserves is that the government has reduced its spending on workers. In the year 2014, a lot of changes were effected in the ESI Scheme. This curtailed a majority of benefits under the ESI Scheme, especially super speciality treatment and resulted in a huge reduction in ESI expenditure. The eligibility criteria to get super speciality treatment, which was three months of joining the scheme, was changed to two years of service.
Another fact is that while the number of employees covered under the ESI increased from 1.95 crores to 3.11 crore ie 59.5% during the period from 2014 to 2018, the number of dispensaries increased only marginally from 1418 to 1500 ie 5.7% only. This has led to a further underutilization of funds collected. There are only 44 model hospitals in the whole country. Many of these hospitals do not have up-to-date facilities with modern diagnostics, super speciality care and the number of doctors and paramedical staff in dire need of improvement.
If proper medical care is extended to all employees covered under the ESI scheme, as per calculations based on the expenditure towards medical care incurred by the ESIC Delhi, the expenditure on medical care alone may amount to Rs18400 crore per annum. (In Delhi, where the primary, secondary and tertiary medical care – all are administered by ESIC directly per capita medical expenditure is Rs 5,555/- in 2017-18). The income from contributions of ESIC in the year 2017-18 was Rs 20077 crore. In other words, the ESI will not save more than Rs.1677/- crore which may not be sufficient to meet the other social security benefits to employees. The Labour Ministry through its decision has, therefore, been instrumental in piling up huge reserves, without properly utilizing the funds for providing social security to employees and their family members.
Difference between health insurance and social security
There is a need to differentiate between health insurance and social security. Social security is non-negotiable, enshrined as it is in Articles 39(e), 41 and 42 of the Directive Principles of the Constitution of India. Besides, social security is one of the fundamental principles of the International Labour Organisation (ILO), of which India is also a founding member.
As per established principles, social security, which is supplementary to the fundamental rights of citizens, is mandatory and not something which can be left to the option of either the employees or employers. Extension of medical care, sickness benefit, maternity benefit, employment injury benefit, disablement benefit and dependent benefit (family benefit) are mandatory provisions under internationally accepted social security standards. Leaving even one of these benefits out of the social security net would be nothing short of violating the Directive Principles of the State Policy of our Constitution. (IPA Service)