SOCIAL HEALTH INSURANCE

Nehal Jain

Institute of Public Health

Definition of Social Health Insurance

Social health insurance is usually a health insurance scheme with specific characteristics:• Targets the formal sector• Is funded by a compulsory pay roll tax• The premium is usually income rated,

i.e. the lower employees contribute a smaller premium compared to the higher employees.

International Experience

The classical example of a SHI is the German or Belgian health insurance system. Here, employees and employers contribute to a “mutual fund(s)” that is then used to finance the health care for the entire population. Citizens have to enrol compulsorily in one of these mutual funds. The government also provides significant funding to cover those who are not able to contribute.

Recently, Vietnam, which is a low-income country, has introduced SHI and successfully covered most of its population. The same goes for the Philippines, which has managed to cover more than 50% of its population in a short time. Kenya and Tanzania are also embarking on ambitious plans of SHI to cover their population.

Social Health Insurance in India

In India, there are three important schemes, the ESIS, the CGHS and the Railways Health Scheme.

Employee State Insurance Scheme (ESIS)

Established in 1948, the Employees State Insurance Scheme (ESIS) is a social security system, which provides both cash and medical benefits.

Eligibility: Lower paid workers of the formal sector, especially industries. (only those workers with a salary of less than Rs 10,000 per month can join the ESIS)

Employee State Insurance Scheme (ESIS)

Contributions – both by employees and employers (4.75% and 1.75% of their payroll respectively)

Benefits – comprehensive cover, including OP, IP and rehabilitation

Managed by the ESIC Presently covers 47 million members

Problems

Less than half the enrolees use the ESIS facilities because of the low quality of care.

This is further compounded by the rude and impudent behaviour of the ESIS staff, shortage of staff, inadequate drug and supplies and non-functional equipment.

Many of the staff are not aware of the benefits. The employers also do not disseminate the information to their staff. Further some employers manipulate records to make the staff ineligible for the benefits. Also because of the salary limits on eligibility, some staff keep shifting in and out of the ESIS and they may not be aware of their eligibility status.

The Central Government Health Scheme (CGHS)

Introduced in 1954 as a contributory health scheme to provide comprehensive medical care to the central government employees and their families. The list of beneficiaries includes all categories of current as well as former central government employees, members of parliament, supreme court and high court judges

The Central Government Health Scheme (CGHS)

The staff contributes a nominal amount (ranging from Rs 15 to Rs 150 per month) from their salaries.

The benefit package includes both outpatient care and hospitalisation.

OP care is provided through its own dispensaries, 320 in 2002 in 17 major cities. It also uses the facilities of the government and approved private hospitals to provide inpatient care and reimburses the expenses to the patient.

Drawback

The scheme covers more than 4 million people. 18% of the central government budget is used to finance a SHI for the civil servants who constitute only 0.4% of the population.

Advantages

A healthier work force as they are covered, and so have easy access to health care.

SHI produces a stable source of income for health care and which is independent of the Ministry of Finance and not subject to budget fluctuations.

It provides additional source of funds to the health sector, as there are contributions from the employees and the employers.

Advantages

A mandatory scheme saves money in marketing the product. Also a mandatory scheme ensures that there is significant enrolment, minimising some of the inherent problems of health insurance. SHIs with a large pool can negotiate with providers for better quality of services

There is considerable pooling between the rich and the poor, between the sick and the healthy and between the young and the old. Thus the young, rich and healthy cross-subsidise those who need more health care.

There is more equity, because of the income rated premiums – the premiums are collected in terms of ability to pay, rather than the need for health services

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