Employer Health Insurance (3)

7/27/2019 Employer Health Insurance (3)

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EMPLOYEE HEALTH INSURANCE

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CHAPTER-1

1 INTRODUCTION AND METHODOLOGY

S.NO CONTENTS PAGE NO

1 INTRODUCTION AND METHODOLOGY 01

1.1 Introduction 03

1.2 Background of the study 05

1.3 Purpose and objectives 08

1.4 Organization of the paper 09

1.5 Methodology 10

1.6 Scope of the study 11




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1.1 INTRODUCTION

The word “hospital” is derived from the latin word which comes from Hosper

meaning a host. The term hospital means an establishment for temporary occupation by

the sick and the inured.

“The hospital is an integral part of social and medical organization, the function

of which is to provide for the population complete health care both curative prevention

and whose patient care service reach out of the family and its home environment. The

hospital is also a centre for the training of health work ers and bio social research”.

Hospital is becoming large and complex, with increase in modern health

facilities, increase health awareness among people and the advent of new technologies in

medicine. Government intervention recognizing the hospital a san industry and regulating

their purpose and performance has also increased in India.

Good and professional management is essential for all the fields of human activity

and the Hospitals are no exception.

Though the use of modern management techniques for the optimum utilization of

scarce resources is widely accepted , its use in the area of health sector , especially inHospital Administration does not have the same reception.

In a changing society , Hospital Administration in its right perspective is very

important. Moreover, Hospitals are very complex organization with a variety of jobs to

be performed by various personnel- specialized as well as the hierarchy in which the staff

members have to work is very sensitive and a constant tension exists. Rapid strides have




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been made to improve the quality of preventive and curative service health care to the

people. Hence, management of hospital needs the same care and consideration which is

essential for running a business or industrial enterprise. It also calls for an imaginative

and constructive study of organizational behavior in the personnel managing the hospital.

Formal education and training methods have also been developed to acquire the

knowledge. But the success of the hospital administrator is not measured in terms of

money which they receive but it is to be considered in terms of the contribution which

they make to the welfare of the society.

As we prepare ourselves to march in the 21st

century , the organization and

management of health services and hospitals will also have to change rapidly in tune with

the advanced technological innovations. A thorough knowledge of proper application of

the existing infrastructure would help the management to plan effectively for acquiring

more modern equipments. Organizational potency of any instigation will depend on the

achievement of the required output of its managers and professionals.

Talking about “Hospital Administration is like talking about summarizing. One can

desire some principles and postulations and give advice. But is the final analysis , the

only way to achieve proficiency is to jump in and do it”.

It is therefore very necessary that each and every professional in the Hospital should

be equipped with the practical knowledge of the managerial function.

1.2 BACKGROUND OF THE STUDY




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Hospitals are traditionally a place of healing. They have always been seen as an

institution for treatment, care and cure of the sick and wounded , for the study of the

disease and for the training of physicians, nurses and allied health personnel.

But we live in challenging times. Hospitals are beginning to organize their efforts by

focusing on VAS (value added services) that differentiate a hospital from its competitors

and bind the clients to the value added hospitals.

The health system of the country, the largest governmental organization next only to the

educational department is already very large and would increase much more in the next

decade. Co-ordination and management of these diverse components is going to be much

more difficult and complex.

In the health sector , such complexity and scarcity can be recognized in a host of

questions, that concern all who work there or use its services. Why has the volume of

resources absorbed by the sector increased so fast over the last four decades worldwide?

Why does it seem that no matter how many nurses and doctors are employed , new

technologies adopted new drug therapies introduced , that even the rich countries of the

world do not seem to be able to provide the highest quality of care for all citizens? Is usefollowing a wrong method of administration in the health sector?

Therefore due to the peculiar types of services and peculiar situations that arise in a

hospital but scientific approach is essential in its management. Management in hospitals

shall be professional for all the activities under taken in the hospitals.

Hospitals abroad now have a cadre of hospital administrators who combine some

knowledge of sound management principles and techniques. As it is essential in industry

to divorce management from ownership, similarly it is essential to separate management

from the care of side.

Ultimately, efficiency depend the proficiency and integrity of the persons employed in

the hospital. Unless and until they are proficient and expert in their respective areas ,

whether it be a medical side or administrative side, are cannot expert its worth from it.




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The question arises as to how we can develop the administrative skills and capability

along with hospital professional competence among the personnel responsible for

administration?

The future for a better administration is established by more formal university courses in

the subject. Close correlation of business management , public health. Medical

administration and welfare concepts are necessary, for the real worthwhile service.

Health care in India is basically urban area oriented, and hospital with n30 beds will stand

to gain a great deal if they adopt the system of employing a trained and qualified

administrator to take care of management aspects.

Still in most of the hospitals – administrative or managerial functions are normally

considered as “nuisance functions” and do not enjoy high status in a hospital system.

But, it is high time now to make hospital management more efficient systematic,

scientific and professional.

The various group involved – the hospital administrator, other personnel, the government

and of course the patients , stand to gain immensely from such attempt to optimize

resource utilization by introducing professionalism in hospital management and in all the

hospital courses. And the time to begin is now.




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“Tomorrow begins today” the strength of hospitals fundamentals, the spirit of winning

and the impressive transition it has made in these changing times will enable this great

organization to face the challenges of the 21st

century with a sense of purpose and to

continue to say at the top even in the next country.

However the achievement will be determined by the size composition of the hospitals in

the next four years, the acceptance of the health care professionals by the non-

governmental hospitals , and their own professional contribution to the efficient

management of hospitals.

1.3 PURPOSE AND OBJECTIVES:

1.3.1. Purpose :




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The overall purpose of this project is to understand the corporate management

functions in a health care organization. This covers about the Health Insurance.

1.3.2 Objectives :

In the fulfillment of the above purpose following are the objectives.

1.3.2.1 To study about the employer Health Insurance in a Hospital.

1.3.2.2 To study about the coverage of employers in a Hospital.

1.3.2.3 To study about the register of employees in a Hospital.

1.3.2.4. To study about the maintenance of registers in a Hospital.

1.4 ORGANISATION OF THE PAPER

The organization of the paper includes the total study done as given below

Chapter-1 includes introduction, background of the study, purpose and objectives,

organization of the paper, methodology and scope of the study.

Chapter-2 includes introduction, objectives of ESIS, the employers insurance scheme,

expansions, design of the ESIS , the insurer for the expanded ESIS , premiums and

contributions for the expanded ESIS, the benefit package, the provider network for the

expanded ESIS , administration of the insurance programmme, criteria for empanelling a

hospital, claims and reimbursements, health insurance present scene and issues for the

future, consumer perspective, health insurance scene, mediclaim scheme offered by GIC

and other insurance companies, presentation on employee state insurance scheme,

particulars in India, insurance and social security schemes for the poor, Indian medical

associations role in changing scenario in the health sector, health insurance and

organization and structure of private provision.




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Chapter-3 includes advantages to employers, benefits to employers, benefits under the

scheme, cash benefits, employers files and registers.

Chapter-4 includes the comparative analysis of data, findings and suggestions.

Chapter-5 includes the conclusion of the study consisting of bibliography and appendix.

1.5 METHODOLOGY

1.5.1 Research Design

The nature of research design depends on the way in which the problem is

formulated. The research design used for the study in descriptive design and

observational design. The descriptive study is typically concerned with determining

frequency with which something occurs on how to very variables together.

1.5.2 Source of Data

The sources of data are both primary data and secondary data.

1.5.2.1 Primary Data

Primary data are these which are new and original in nature. These data are the

first hand information generated to achieve the purpose of the research. It was collected

through personal interaction and observation.

1.5.2.2 Secondary Data




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Secondary data are these data which are not new and original in nature. These

data are obtained from published or unpublished sources. It were collected through text

books past records and websities.

1.5.3 Sample Size

The sample size is limited to the period of post three year‟s data.

1.5.4 Data Collection Method

Data is collected by interaction with the staff of the hospital and by the personal

observation.

1.5.5 Analysis of Data

Analysis of data helps to determine the critical examination of the tabulated data.

It helps to compare the collected data.

1.6 SCOPE OF THE STUDY

The study is focused on corporate management functions of a particular multi

specially Hospital. Data were collected by observation, personal interaction and referring




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secondary source of data such as files, records, registers maintained in the hospital under

study. Simple statistical tools were widely used the period of data collection is one

month.

CHAPTER-2

2. LITERATURE SURVEY

S.NO CONTENTS PAGE.NO

2.1 Introduction 14

2.2 Objectives of ESIS 15

2.3 Employer Insurance scheme 16

2.4 Expansion 18

2.5 Design of ESIS 23

2.6 Premiums of ESIS 25

2.7 The benefit package 26

2.8 Network of ESIS 31

2.9 Insurance program 34

2.10 Empanelling hospital 36

2.11 Claims and reimbursement 38

2.12 Issues for the future 41




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2.13 Consumer prespective 42

2.14 Health insurance scene 44

2.15 Mediclaim scheme 45

2.16 Presentation of ESIS 47

2.17 Particulars in India 48

2.18 Social security schemes 50

2.19 Changing scenario in health sector 52

2.20 Structure of private provision 53

2. LITERATURE SURVEY

DEFINITIONS AND MEANINGS

Multi-employer health plan – Generally, an employee health benefit plan maintained

pursuant to a collective bargaining agreement that includes employees of two or more

employers. These plans are also known as Taft-Hartley plans or jointly-administered

plans. They are subject to federal but not State law .

Minimum premium plan (MPP) – A plan where the employer and the insurer agree that

the employer will be responsible for paying all claims up to an agreed-upon aggregate

level, with the insurer responsible for the excess. The insurer usually is also responsible

for processing claims and administrative services.

Multiple Employer Welfare Arrangement (MEWA) – MEWA is a technical term

under federal law that encompasses essentially any arrangement not maintained pursuant

to a collective bargaining agreement (other than a State-licensed insurance company or HMO) that provides health insurance benefits to the employees of two or more private

employers.




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Medical savings accounts (MSA) – Savings accounts designated for out-of-pocket

medical expenses. In an MSA, employers and individuals are allowed to contribute to a

savings account on a pre-tax basis and carry over the unused funds at the end of the.

One major difference between a Flexible Spending Account (FSA) and a Medical

Savings Account (MSA) is the ability under an MSA to carry over the unused funds for

use in a future year, instead of losing unused funds at the end of the year. Most MSAs

allow unused balances and earnings to accumulate. Unlike FSAs, most MSAs are

combined with a high deductible or catastrophic health insurance plan.

2.1INTRODUCTION

Health-financing models based on formal employment are widely prevalent

and make up a significant source of health financing. This is in addition to the

other sources of health financing through general government revenues and private

insurance. These health financing mechanisms are recognised as powerful methods

to ensure adequate financial protection for all against healthcare costs, and are

compatible with the goal of fairness in financing.

In tax-funded systems, the population contributes indirectly via taxes, which then

form part of the general revenues to be used in the provisioning of healthcare. In

Employment-based social health insurance systems, it is the employees and employers

who pay in their contributions, with or without additional state support. These are

then used in funding healthcare for the employees, sometimes also covering their

dependents. Such employment-based contributions could take diverse forms, like a

mandatory, earmarked, payroll-tax, or a voluntary, tax-deductible contribution to a

health plan.

Internationally, many European nations‟ healthcare is financed by employee-based

social health insurance. The employers contribute to a „sickness‟

fund. The contributions may range from 5 to 15% of the annual income. This sickness

fund is used to finance the healthcare of the entire population – both employed and

unemployed. Germany, Belgium, France are examples from Europe, while Japan,




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Thailand and the Philippines are good examples from Asia. Further details are given

below

In India, various forms of employment-based health coverage already exist, such as

the widely recognised Employees‟ State Insurance Scheme (ESIS) for employees in

the formal sector, the Central Government Health Scheme for serving and retired

civil servants, the schemes for serving and retired employees of the Armed Forces,

Railways, Paramilitary forces and other government organisations, and the various

health coverage schemes and benefits provided by banks, insurers, other public

sector companies, and the private sector employers. Together, they make up about

7% of the total health expenditure in the country. We shall now take a closer look at

these models, especially at ESIS, and whether employment-based health insurance

models are suitable for India.

2.2 OBJECTIVES OF ESIS

Employment-based insurance schemes aim at:

Ensuring adequate financial protection for all

Reducing adverse selection

Providing cross-subsidisation

Effectively pooling health risks, bringing in efficiencies from bulk purchasing of

health services.




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2.3 THE EMPLOYERS INSURANCE SCHEME

Employers‟ Insurance Scheme is one of the oldest health insurance schemes in India, is

aimed at targeting the formal sector to provide a social security mechanism for the lower

paid industrial workers. Established vide the ESIS Act in 1948, the scheme gives both

cash and medical benefits to the employees of factories and service establishments who

earn less than a specified wage ceiling, currently capped at Rs 7500 per month.

All eligible members must contribute a share based on their wages (currently 1.75% of

wages, but exempt for those earning less than Rs 40 per day) while the employer

contributes a larger share (currently 4.75% of wages of all eligible employees, including

the low paid ones). The state government also contributes a minimum fixed amount. The

scheme is managed by the Employees‟ State Insurance Corporation (ESIC), a statutory

body established under the Union Ministry of Labour, comprising representatives from

the ministries of labour, health and employees‟ federation.




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2.3.1 BENEFITS UNDER THE SCHEME

These include:

free, comprehensive healthcare at ESIS facilities

cash compensation for loss of wages due to illness

maternity benefits

disability benefits

survivorship and funeral expenses in the event of death of the worker.

Healthcare includes preventive, promotive, curative and rehabilitative services. ESIS

has its own dispensaries, hospitals and medical staff. It also empanels select private

practitioners to provide medical care to its beneficiaries. Patients requiring treatment

from specialists not available at the ESIS hospitals can receive it at the speciality

facilities, with the ESIS reimbursing the expenses.

Presently, the scheme is spread over 677 centres in 25 states and Union territories

across India, covering 7.8 million employees and more than 25 million beneficiaries.

One main limitation of the scheme is its coverage. Currently the scheme is mainly

aimed at the low-paid, non-supervisory industrial worker.




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2.4 EXPANSIONS

In this chapter, the formal sector can be covered by expanding the

ESIS. It could lead to many advantages as listed below:

1. Such an expansion would build upon an existing scheme which already has in

place legal mandate and provisions, structures to collect the contributions, provider

networks, claim settlement and payment mechanisms and a management body.

It could be easier to scale up this structure than to create a new one, thus saving

time and effort.

2. In the ESIS the current scope of risk pooling is only between the healthy and the

sick. All the beneficiaries are low-paid industrial workers and their dependents and

so there is no risk sharing between the rich and the poor. Expanding coverage

would bring larger numbers and all classes of wage earners into the risk pool.

3. A large purchaser and provider of health services like the ESIS could be a more

efficient mechanism of financing the health needs in the formal sector than prevalent

modes of out-of-pocket payments by individuals or the smaller group insurance

plans purchased for employees by their employers. For universal coverage of

healthcare, more funds would need to be generated in a more organised manner,

for the health service needs of the covered population. By providing a social




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insurance mechanism for the formal sector, these funds can be utilised in a more

efficient manner.

4. There is a growing demand for medical insurance and risk protection for health

needs, even among those earning well. The ESIS with its long years of experience,

its healthcare institutions, statutory sanction and government backing would gain more

credibility and accountability.

5. Expanding the scope of ESIS will allow existing hospitals, facilities and human

resources of ESIS to be better utilised. Enhancing the scope of the scheme will

help to bring down administrative costs of ESIS.

6. As higher paid workers are enrolled into the scheme, the same percentage of wages

will get converted into higher contributions in rupee terms, raising the average rupee

contributions per member of the scheme. This increased contribution provides the

scope to improve upon the benefit package or to reduce costs of the scheme in

percentage terms.

2.4.1 PRE REQUISITES FOR EXPANSION OF THE

ESIS

Before considering expansion of the scope of ESIS, the following pre-requisites willneed to be addressed:

To create widespread consensus on this matter. Large industrial houses, chambers of

commerce and federations of industry should be involved. The main advantages which

could be highlighted to them are: social security for their human resources, ease of

administration of health benefit schemes, standardisation of coverage, etc. They will also

have to be assured that the quality of services and accessibility of services shall receive

due attention in this expansion. Efforts will also be needed to reassure the industry that

rather than being a 'payroll tax' without any direct returns, this scheme is an important

mechanism for social security and staff welfare for employees in the formal sector.

To convince the ministries of commerce, etc. about the rationale of the scheme.

This move would be associated with a marginal increase in input costs and would




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have some impact on the cost of Indian goods in the international market. At

a time when the USP of India is its cheaply produced products and services,

expanding the ESIS might reduce this competitive edge. On the other hand, this

can also be taken as the actual cost of production even now. So far the industrial

houses have been benefiting by passing on this cost, either to their employees or

to the government, and this scheme only makes them partially share the burden

of healthcare of at least their employees. Last but not least, this can also actually

be a tool to enhance the productivity of the employees by keeping them healthy.

The employees‟ associations and unions must not regard this arrangement as

a diversion of their members‟ funds. Rather, they should be convinced of the

benefits for their members as such a move would increase the funds into the ESIS

and provide better quality of care for them.

Once a consensus has been reached, suitable amendments will need to be made

in the current ESI Act to include necessary changes. The Central Act could be

amended in a manner which allows the individual states to expand the scope of

the ESI scheme according to their local requirements, without compromising on

the scheme's basic principles.

Some of the main changes that need to be considered for revision in the Act

include:

Establishing the ESIC as an autonomous body, with independent

management.

Removing the wage ceiling limits for eligibility.

Identifying the establishments that are eligible (along the lines of the EPF) or

empowering the states to expand the list of covered establishments.

Strengthening the capacity and powers of the ESIC to

Collect dues from the establishments including penal provisions for

defaulting establishments or those not disclosing the true numbers/wages

of their employees.

Contract with and purchase care from private providers. Already, ESIS

uses various payment mechanisms, including prospective payment




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mechanisms, and enabling provisions will help ESIC to control costs and

keep care accessible.

Purchase re-insurance from public or private insurance companies. This

will limit the exposure of the scheme and keep its costs predictable.

An expanded ESIS will improve its capacity to provide good health insurance through

a mix of its own facilities, facilities taken over for administration from PSUs and other

employers hitherto running their own facilities for their employees, as well as by

purchasing good quality care from providers.

2.4.2 BENEFICIARIES IN AN EXPANDED ESIS

Currently the ESIS only insures the low-paid industrial workers who are working in

Power-using non-seasonal factories and employing 10 or more persons

Non-power using factories and employing 20 or more employees

Service establishments like shops, hotels, restaurants, cinema, road transport

and newspaper establishments employing 20 or more persons.

It is recommended that the coverage of the ESIS is expanded in an incremental

manner, e.g. in the initial phase, the scheme could be expanded within the existing

ESIS-covered establishments to cover all the staff (including those who are earning

more than Rs 7500 per month) and their dependents. In the next phase, an expansion

to other establishments not presently covered by ESIS could be undertaken, while

reducing the minimum number of employees required to be within the scope of the

scheme. In the final phase, the rest of the formal sector, including contract workers,

construction workers, the self employed, etc. could be covered by the scheme.

The eligibility criteria until Phase II could be all permanent employees in these

establishments, along the lines of provident fund contributions. Retired employees can

continue to remain in the scheme if they contribute a fixed amount, depending upon the




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last salary drawn. All dependents (to be defined) are to be eligible for the benefits. In

Phase III, the eligibility criteria would need to be further relaxed for the sake of

contractual workers holding contracts longer than a defined period, say 3 months.

The first phase would contribute greatly to an increase in the number of members, as

most of the higher-paid, or white collar workers would be covered. This would take

care of a constant complaint of the ESIS – that when an employee gets a raise in pay,

it disbars him/her from the ESIS and its benefits. At the same time, it is clear that the

higher paid workers presently do not see any benefit in contributing to the ESIS. In the

last decade or so, while the scope of ESIS has been expanded from those earning

from Rs 3000 per month to Rs 7500 per month, the utilisation of services continues

to made mainly by those belonging to the lower income strata within the covered

groups. Thus, despite contributing higher amounts per month, the relatively higher

paid workers seem not to be availing of the ESIS benefits to the same extent as the

lower-paid workers. This could be the reason for the income surpluses in the scheme

in recent years. However, by covering all the staff members, risk-protection and

riskpooling for all is taken care of, and all employees continue to benefit throughout their

employment period and even after.

Covering all employees has another advantage. Presently, under the Act, to opt outof ESIS, any establishment needs to show a better coverage already existing for its

employees and to seek specific exemption from ESIS. Thus, even if an establishment

chooses not to be covered by ESIS, adequate health coverage of all its employees

would continue to be ensured.

The risk pooling effect is greater when funds are pooled across establishments, e.g.

if the IT industry contributions are pooled with that of a small factory. If managed

properly, there would be money transfer from the better-off to the poor workers and

their dependents. On the other hand, this could also be interpreted by the higherpaid

workers as an additional „tax‟ on their wages, if they do not see any advantages

from their contribution.




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2.5 DESIGN OF THE ESIS

A proposed design of the expanded ESIS could look like what has been shown under

The employees, their employers and the government would contribute to a

common pool called, for the purpose of this paper, Employees‟ Health Insurance

Fund (EHIF). The fund represents the pooled contributions of all employees across

all establishments participating in the scheme, and is the corpus which would beutilised to provide the benefits under the scheme.




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2.5.1 PROPOSED DESIGN OF THE EXPANDEDESIS

To provide an element of choice and help facilitate the process of consensus

for the expansion of the scheme, the employees could be provided with three

options as regards their health coverage: to enrol with the ESIS, to enrol with

a private health insurance scheme, or to remain in the institutions‟ healthcare

scheme (in the case of those institutions that provide their own health services

for its employees). The incentive to choose ESIS rather than the private health

insurance would be the lower premium and the higher coverage offered by the

ESIS as compared to the private health insurance. Thus, enrolees would opt

for non-ESIS insurers only if these alternative insurers give them better coverage

or better quality of services than ESIS. Competition would also inspire the ESIS

to provide better services so that it does not lose the enrolees to competing

insurance companies.

Employers with existing health facilities could either continue with the sameor hand them over to ESIS for administration. The ESIS could then use these

facilities for any of its beneficiaries. If the employers choose to continue with their

own facilities, and to opt out of the ESIS, they would still need to contribute the

difference of the contribution they would otherwise be paying into the EHIF, and

the equivalent risk-adjusted average premium amount which EHIF would have

paid to any of the private insurance schemes for covering all the employees of

the establishment. Also, the employers must ensure better coverage than ESIS

to be able to opt out. Such an arrangement prevents misutilisation, ensures

comprehensive coverage for employees, yet lets employers choose to run their

own facilities, if they so desire.

If the employee enrols in the ESIS and requires care, he/she can receive care

at any of the empanelled hospitals or providers of the scheme, and the provider




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will be reimbursed or otherwise paid by the EHIF. On the other hand, if the

employee enrols in a private health insurance scheme, and requires care, he/she

will be subject to the policy conditions and coverage provided by the insurance

company.

Even for enrolees of the ESIS, there could be a provision for purchasing addon

or supplementary covers from private insurers, which could provide them

with services that are not part of the standard ESIS benefit package. This

could include, for example, stay in special/private wards, where the difference

between the costs of the general ward and the special ward could then be

paid by the insurer providing the supplementary cover. The availability of this

choice will also ensure that the higher-paid workers can avail of high-end

or non-essential services if they so desire, by purchasing the appropriate

add-on insurance covers over and above the contributions they make to the

ESIS, and the availability of this option will help achieve industry and employees‟

consensus.

2.6 THE INSURER FOR THE EXPANDED ESIS

The Employees‟ State Insurance Corporation (ESIC) will be the main insurer of the

scheme. It will provide certain products for the employees. Those employees who are

not satisfied with these products could purchase insurance from private insurance

companies. However, the payment of premia for this purchase would be through

the ESIC, so that it can calculate the applicable premium, make sure that all the

employees of the institution are insured, and that the contributions from the employers

and the governments into the EHIF are being collected at the appropriate time.

The role of ESIC would include:

Providing health insurance

Purchasing healthcare from providers in a larger way

Managing employer health facilities

Paying for alternative health insurance cover from insurance companies. This

requires that the capacity of the ESIC be enhanced.




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The ESIC can reinsure with the GIC or other appropriate reinsurer(s) to protect its

fund. Along with good fund management, this should ensure that there are enough

resources to provide good quality care to all the employees in the formal sector.

Currently, the ESIC‟s credibility is low, and it is seen as a bureaucratic organisation

that responds more to its own needs than of the employees. This image has to

change, for which professional managers (finance managers, health managers,

actuarials, human resource managers, etc.) need to be enrolled to manage the EHIF

and the provider network.

2.7 PREMIUMS AND CONTRIBUTIONS FOR THE

EXPANDED ESIS

2.7.1 SOURCE OF CONTRIBUTION

Contributions to the ESIS will be from four basic sources:

(i) the employees

(ii) the employers

(iii) the state government

(iv) the central government. The government contributions will be mainly to fill inthe gaps, if any, and will be subject to limits. The government would also, as

it does now, continue to contribute to the provision of health insurance in an

invisible manner by doing away with income taxes (individual and corporate) for

all contributions made into the fund.




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2.7.2 CURRENT RATES OF CONTRIBUTION

At present, the employees contribute at the current rate of 1.75% of their payroll.

This percentage share could be retained, or with higher expected contributions and

favourable claim experience, be reduced marginally. The employee contribution will

be deducted at source by the employers and transferred to the EHIF on a monthly/

quarterly basis. Similarly, the employer‟s contribution (of 4.75% as at present, or a

lesser amount as decided) will also be added to the amount deducted at source

and transferred to the EHIF. These contributions will be the core funding mechanism

for the EHIF. The ESIC will use its MIS and its field machinery to ensure that all the

enrolled employees in the establishments are contributing. Special cells for this can

be formed and provided with punitive powers to enforce the legislation, including

levying fines on defaulters.

At the end of the year, after the accounts are closed and audited, any deficit in the

EHIF will be made good by the government in a ratio of 2:1 (state: centre). However,

there will be an upper limit to this to control the spending. The premia can also be

suitably revised to prevent a recurrence of the deficit.

This contribution into the EHIF will ensure that the employee receives the standard

set of ESIS benefits as described below. However, if an employee wants greater

coverage, high-end or higher benefits, he/she can subscribe to add-on or

supplementary covers by paying an additional premium or contribution. Such covers

can be provided by both ESIC and private insurance companies, and the employee

can select from a variety of products and insurers. This approach ensures that

the employee gets all the information at one site and is able to make an informed

decision. At the same time, the insurance companies have to incur less cost in




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marketing as most of their products will be available for the individual customer at

the point of need.

Who will join the scheme?

Being a mandatory insurance, all employees will have to join and contribute to the

scheme. However, in case both husband and wife are in the workforce, a policy

decision will need to be taken; in certain countries, both spouses continue to pay

their premia, while another policy option could be that only one need contribute. In

the latter case, on presenting an appropriate certificate, the lower-paid spouse can

be exempted from contributing towards the ESIC. However, this has to be renewed

every year to prevent fraud.




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2.7.3 CONCEPT OF SOLIDARITY

The contributions will continue to be income-rated, ensuring some form of equity.

Those who earn more will contribute more, and will cross-subsidise those who earn

less. However, for this the concept of solidarity needs to be built up, else there will be

tremendous opposition to such a move.

2.7.4 INSURANCE CARD

All the enrolees will be issued an insurance card, which not only identifies the

covered individuals and their eligibility for cover, but ideally serves as a smart card

that can be swiped at any of the empanelled dispensaries/hospitals, ensuring a

cashless health cover for the enrolees. Only employees of those establishments

who have contributed to the ESIC in the previous quarter will be eligible to use




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the benefits, while for others, the card will initially warn of default status and after

two quarters also lead to the cashless facility being temporarily withdrawn. Only

after the defaulting establishment pays up its dues will the employees be eligible

to lodge their claims for reimbursement. This mechanism can be another check

on defaulting institutions, while also not depriving the employees of cover, as their

own contribution is likely to have been deducted by the employer on time. The

smart card will have all the details of the employee, his/her dependents and the

institution that he/she works in. It will include a photograph of their family, and

perhaps some biometric identifiers such as fingerprints coded and embedded

electronically in the card chip. This will help minimise fraud due to impersonation to a

large extent.

2.7.5 CONTRIBUTION RECORD

The contribution records will be maintained in a transparent manner, and will be

available for viewing at a website. This will enable all the stakeholders – government,

insurance companies, employees and employers – to review the status of their

contributions. Separate accounts will be maintained at the establishments for

the ESIC contributions and prior to being paid into the EHIF, this corpus will not

be used for any other purposes as is the wont with many of the social security

contributions.




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2.8 THE BENEFIT PACKAGE

This is an important factor for the success of this scheme and includes medical as

well as cash benefits to enrolees.

2.8.1 Cash benefits

These are an important component of the total claim cost incurred by the ESIS, and

an important social security mechanism for employees at the lower end of the wage

spectrum. However, they may not be as relevant for the higher paid workers. At this

stage, the policy maker has three options, namely:

To separate the system for cash benefits from the health benefits/health insurance

component. Contributions received from employers will be distributed into these

two parts and separately administered for persons drawing wages up to Rs. 7500

per month. The contributions in terms of percentage of wages could then be

lower for higher-paid workers who are not eligible for any cash benefits.

To reduce premiums for all employees while making all the cash benefits available

only to those who earn less than Rs 7500 per month.

A ceiling on the daily cash benefit, basing it on the wage drawn by an employee

earning up to Rs 7500 per month.

In each of these options, all those presently receiving the cash benefits continue to

do so unaffected, while there is still scope for cutting down premiums.

The higher-paid workers may not value the cash benefits vis-à-vis the higher

contributions required for the same, and there may not be much point providing

them with this cover. So their cover could be limited only to the other three benefits,

i.e. medical benefits, maternity benefits and disability benefits.

2.8.2Medical benefits

In the healthcare component, currently the employees receive the following benefits:

2.8.2.1 Promotive care – for all.

The ESIC will develop materials and inform employees and employers on healthy




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lifestyles.

Employees will be encouraged to give up smoking, allocate some time for physical

exercise, encouraged to eat a healthy diet, etc. Employers will be educated and

encouraged to adopt safe industrial practises so that accidents and exposure to

occupational hazards are minimised.

The workers as well as the management will be made more aware about pertinent

industrial hazards.

The ESIC will thus endeavour to reduce illness on all counts through a special unit

staffed by experts in communication, media, occupational health, etc.

2.8.2.2 Preventive care – for all the employees and their dependents, including

antenatal check-ups for pregnant women

routine immunisation services for those eligible

annual medical check-ups for the staff and screening programmes.

2.8.2.3 Curative care – OP

For all the employees and their dependents, provided at ESIS hospital OPDs,

ESIS dispensaries and empanelled dispensaries.

Doctors will be empanelled based on pre-specified criteria to provide OP care for

the insured.Over a long term, a gatekeeper function through a system of registration with

a „family doctor‟ can be developed to reduce the costs of healthcare as it will

ensure that illnesses are treated at the appropriate level.

The smart card will identify the insured and control fraud.

2.8.2.4 Curative care – IP care.

This will need to undergo certain changes from the system prevalent presently.

All insured patients will be eligible for the standard package consisting of meeting

hospital expenses for most conditions, up to a maximum of, say, Rs 200,000 per

family per year.

The only exclusions could be cosmetic surgeries, spectacles, dental prosthesis,

etc. Admissions will be in empanelled, pre-contracted hospitals and ESIS‟s own

facilities.




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The facility available would be a semi-private room in the ESIS hospital and a

general ward in the empanelled hospital.

Co-payments will be required for those availing of facilities in non-empanelled

hospitals in emergency conditions, as a cost-control mechanism and to prevent

moral hazard.

Those who find that this package is inadequate for their needs can subscribe on

additional payment to an appropriate add-on cover from ESIS or a private health

insurance company, which will provide various additional benefits as per their

needs, like coverage in higher classes of rooms, greater annual ceilings, annual

executive health check-ups, etc.

To avail of IP care, the patient must be referred from an empanelled dispensary.

This will reduce moral hazard and also reduce costs. One of the basic documents

required would be a referral letter explaining why the patient could not be treated at

the primary level and required care at the secondary or tertiary level. This needs to be

monitored strictly to ensure that there is no fraud in the system.

One important consideration for the policy maker at this stage would be to provide

mechanisms for portability of the coverage across employers and perhaps also

during brief periods of unemployment. This will ensure that the employees do notlose benefits when they change their employers. One basic requirement for this

would be a unique beneficiary identification number that is used by the employee.

Once allotted, this could remain constant even when employers change. Also, the

scheme could provide for a limited period, say three months, of continued cove

2.9 THE PROVIDER NETWORK FOR THE

EXPANDED ESIS




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This is another crucial element for the success of this scheme. If the ESIC can

ensure credible healthcare at reasonable costs, it will ensure an acceptable and

sustainable healthcare programme. To this end, the ESIC should negotiate with the

providers and enforce appropriate conditions in the interest of its beneficiaries. One

of the first activities of the ESIC would be to empanel dispensaries and hospitals.

Similar pre-qualification criteria can be developed by the ESIS for the dispensaries as

well. All hospitals meeting the specified criteria and agreeing to ESIS conditions will

be eligible to enrol under the ESIS.

However, the ESIS hospitals must change their mode of operations. Currently

they are financed by the ESIC and the staff are paid a fixed salary, leaving little

incentive for them to perform. Once this expanded ESIS is in force, these hospitals

could become independent trust hospitals which will have to compete for patients

along with the private hospitals. They would however still have certain preference

of beneficiaries, e.g. a higher class of rooms will be available to beneficiaries

in ESI facilities. They could also admit non-ESI patients and charge marketdetermined

rates from them, improving utilisation of their facilities. These steps

will help them become more efficient and patient-friendly. Also, it would help to

provide a scope of incentives and disincentives to staff based on individual and

collective performance.The ESIC should also ensure that there are adequate hospitals/dispensaries

empanelled within the area where its beneficiaries are located. Norms for this

are suggested above and can be developed as per local needs and national and

Once the hospitals/dispensaries are empanelled, the ESIC should immediately

develop standard treatment guidelines for common diseases. Based on this, the

costing for each procedure could be worked out by the ESIC management team.

This will help develop tariffs for inpatient procedures and for contracting with private

providers. These tariffs could be a flat rate, i.e. Rs X for a normal delivery, Rs Y for

a Caesarean section, or could be based on location, e.g. metro and non-metro




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tariffs. This will prevent costs going up and be easier to administer.

Next, the ESIC would monitor whether these hospitals are adhering to the

aforementioned guidelines and providing quality services to its beneficiaries. For

example, ESIC could check if the patients are being prescribed generic medicines,

the treatment is as per the standard treatment guidelines, the billing is as per the

contracted tariffs and so on. This is an important activity for which a separate

monitoring cell needs to be set up. Supervising the hospitals, helping them

implement the guidelines, empowering the hospitals to influence the prescribing

pattern of the doctors, all this and more will be part of the activities of the ESIC, as

provider-level reform will need to complement reform of the financing system for

optimum effect.

2.10 ADMINISTRATION OF THE INSURANCEPROGRAMME

The ESIC, with its long experience in administering an insurance programme, already

has the administrative capacity to manage such a scheme yet certain changes are

required to be made in its current administrative role. For example, it needs to:




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2.10.1 Create awareness among the employees. Especially as more employees join the

scheme and later more institutions join the scheme. Creative efforts using modern

media should be used to focus on the positive impact of having health insurance.

The hospital should:

Be registered with the local administration and under other relevant legislation.

Have appropriate numbers of resident medical officer (allopathic or ayurvedic or

homeopathic or siddha or Unani) available round the clock.

Have facilities to admit at least 10 patients at a time.

Have at least 3 qualified nurses (or nursing assistants), at least one for each shift.

Have its own pharmacy, or access to an independent pharmacy that will supply

medicines to the patients.

Have its own laboratory or access to an independent laboratory where investigations

will be done on a credit basis for the insured patients.

Be willing to use generic medicines for the treatment of the insured patients.

Be willing to incorporate standard treatment guidelines for the treatment of the

insured patients.

Be willing to provide cashless services to the insured patients.

Not charge any money from the patient (except for specified co-insurance, as

applicable). All services (medicines, investigations and consumables) will be supplied

by the hospital.

Accept the tariff rate developed by the ESIC.

Maintain adequate records and registers (e.g. IP register, OT register, Labour room

register, pharmacy register, accounts register) as per the prescribed format.




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Allow inspection of its records by prescribed representatives of the ESIC.

Be willing to change its treatment practices if some indicators (e.g. infection rates,

(Caesarean rates, admission rates, investigation rates, etc.) are found to be higher

than average.

Be willing to submit claims as per the requirements.

Be willing to wait for at least 30 days for reimbursements.

In the event of any fraud, bear the cost of the fraudulent bills.




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2.11 CRITERIA FOR EMPANELLING A HOSPITAL

This should also build on the message of solidarity and the steps required to be

taken to use the benefits. This will be an ongoing activity and the centre will be

staffed by experienced media/communications people.

Collect premiums in a more proactive manner to ensure that all the institutions and

their employees are covered by the ESIS.

Identify and negotiate with the providers. This is a new task requiring considerable

technical, managerial and social skills. The negotiators should have knowledge

about medicine and treatment regimes and should be able to convince thehospital

management to follow the ESIC guidelines.

Process claims and reimbursements rapidly. For this decentralised offices should

be given the responsibility of managing the funds and issuing cheques.

Computers will help prevent and detect frauds, and will also have provisions for

audit trials.

Provide feedback to the employees and employers in a regular manner. Annually,the

ESIC should give each establishment a summary report indicating the contribution

inflow from their institution and the benefit outflow – in rupee as well as service

terms. This is an important measure for enhancing the credibility of the ESIC and

will in turn ensure that the membership in the ESIC is increased in relation to the

private insurance companies.

Keep accounts of the entire operations. The ESIC has been doing this and should not

face any problems here.




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Monitor the important process and output indicators. A detailed list is given in the

Annexure. The MIS is an important tool which will play a vital role in managing

the scheme. Good data and analysis can help the manager detect fraud, moral

hazard, cost escalation, etc. This requires that good data be generated and an

experienced team analyses this data.

The ESIC should also consider support and grievance redressal mechanisms

through 24x7 call centres to ensure that patients are given their due hearing and

appropriate information. There could also be an online information and email

support mechanism offering the same service. Such a proactive and customerfriendly

approach will not only improve their credibility but also enhance the quality of services.

The entire ESIC should have a dynamic management structure comprising important

stakeholders, e.g. representatives from the government, the employees, the

employers and the health profession. Working committees should meet regularly

to monitor the scheme. Decision making in terms of claims and reimbursements,

empanelling hospitals, negotiating with employers, etc. should be standardised and

then decentralised as much as possible, to minimise bureaucratic delays.




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2.12 CLAIMS AND REIMBURSEMENTS

Claims and reimbursements will be handled by the ESIC. All hospitals/dispensaries

with claims will submit them to ESIC on a monthly basis to the regional office of the

ESIC, which, after checking the validity of the bills, will clear them within one month.

This last point is important for the ESIC to be a credible insurer and a credible payer

for its bulk purchase of services.

The ESIC already has administrative departments but till now they have mostly

looked at accounts. Now they must add technical scrutiny to this job description,

using protocols like Appropriate Evaluation Protocols to check whether the treatment

provided is appropriate and relevant for the symptoms and diagnosis. Such

mechanisms will ensure that the providers are regulated strictly.

From the beginning it must clear that a cashless system of reimbursement will be

followed. The hospitals will have to take some risk in this system, of their claims being reduced or denied. The focus will be on the patient who will benefit from this

measure. Also, with smart ID cards, the risk of fraud, charging over the upper limit, etc.

is totally minimised.

Computerised data at all levels will help in accessing and processing information

quickly. Software for this purpose can easily be developed or customised. Once




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this is in place, the performance of the scheme is likely to improve. More important,

these indicators ensure adequate focus on the patients and outputs vis-à-vis

people.

2.13 HEALTH INSURANCE PRESENT SCENE AND

ISSUES FOR THE FUTURE

During the last 50 years India has made considerable progress in improving its health

status.

Death rate has reduced from 40 to 9 per thousand, infant mortality rate reduced from 161

to 71 per thousand live births and life expectancy increased from 31 to 63 years.However, many challenges remain and these are: life expectancy 4 years below world

average, high incidence of communicable diseases, increasing incidence of non-

communicable diseases, neglect of women‟s health, considerable regional variation and

threat from environment degradation. At any given point of time 40 to 50 million of

population on medication for major sickness. About 200 million days are lost annually.

The annual rate (range) of outpatient: rural 30-152/1000, urban 9-81/1000 and for

hospitalisation: rural 16-76/1000, urban 5-38/1000.

Who finances this? We spend about 6% of GDP on health expenditure. Private health

care expenditure is 75% or 4.25% of GDP. Insurance coverage is negligible. Over the

period the private health care expenditure has grown at the rate of 12.84% per annum and

for each one percent increase in per capital income the private health care expenditure has

increased by 1.47%. The health financing scene raises number of challenges which are:




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increasing health care costs, high financial burden and income of poor gets eroded,

increasing burden of new disease patterns and increasing risks and government health

care system under-funded. Insurance mechanism is one of the financing mechanisms to

over come some of the problems of our system.

Based on ownership the existing health insurance schemes can be broadly divided into

categories such as: government or state-based systems, market-based systems (private

and voluntary), employer provided insurance, member organization (NGO or

cooperative)-based systems. Government or state-based systems include government

employees health scheme (CGHS) and ESIS. Employer managed systems cover about

20-30 million of population.

The schemes run by member-based organisations cover about 5% of population in

various ways. Market-based systems (voluntary and private) have Mediclaim scheme

which covers about 2 million of population. The performance of these schemes has not

been satisfactory.

The scheme to focus poor (Jan Arogya Bima Policy) was introduced in 1995 and covers

expenditure up to Rs. 5000 for a premium of Rs. 70 per annum. Its performance has also

remained less satisfactory. The present insurance schemes are more urban biased.

There are number of implications of introducing the private health insurance. These are

problems of moral hazard, adverse selection, and information gap problem. We have verylittle understanding on what are different insurance mechanisms and how do they serve

the different segments of population. Given the present presence of private sector and

provider payment mechanism, what is best for our country has not been debated.

Insurance Regulatory and Development Authority (IRDA) has been proposed to basically

regulate the entry of insurance providers, protection of interests of policyholders,

promoting efficiency, control and regulation of rates, regulating investment of funds and

supervision of insurer, insurance intermediary and other organisations connected with

insurance business. Given the provider payment systems, which works on fee-for-service

basis, unmanaged indeminity insurance schemes is definitely not the right solution for




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terms and conditions of a contract. Many times insurance companies do not strictly

follow the conditions in all cases and this create confusion.

There is lot of confusion on what constitutes pre-exiting conditions. A number of

litigations cases are disagreement on these pre-existing conditions. These problems also

arise because of lack of specification of number of areas and properly spelling out the

conditions. For example, is it justifiable to bring the health condition of an individual

which he had gone through 12 years ago and he had no complaint during the last 12 years

as the pre-existing condition for settling the claims.

The policy related to accidental death, which have double benefit schemes have been

found to mislead the consumers. Other issue is about the dates of the renewal of the

annual policy.

Insurance companies lack information system and do not give appropriate notice to the

policyholders about the renewal of the policies. This is seen as major issue as it changes

the conditionalities about what constitutes pre-exiting conditions. Courts, however, have

rules that even if there is delay in renewing the policies it should be considered as

renewed policy.

In case two doctors give different reports one favouring consumer and other insurance

company, the insurance company generally follows the later opinion.

Many are taking about the HMOs as the best form of organisation to handle healthinsurance.

However, we not clear about the implications of having this form of organisation. The

insurance companies and its agents do not have much incentive in promoting the health

insurance products. Many doctors are also becoming agents and agents pretend to be

doctors.

What are rights of consumers in these situations are likely to figure out in the agenda

ofconsumer protection agencies.

2.15 HEALTH INSURANCE SCENE

As you all know on 28th October 1999 Union Finance Minister has once again tabled

'Insurance Regulatory Authority and Development Bill' in the Parliament. There is




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considerable debate going on in the Parliament and outside Parliament about the pros and

cons of privatisation of insurance sector. It is now certain that the economic reform

process unleashed since 1990 have left little options for us to retrieve back. Economic

changes need financial support from international financial institutions in present day

global situations. World over, economies are liberalizing the state control on trade,

commerce and industry. It is a subject of debate, whether insurance sector should be

opened up or not in India. We are not going to discuss the same from this platform. We

are here to discuss the Health Insurance in India. There are many concerns:

(a) Environmental pollution is causing serious health problems to humans. The fast

spreading AIDS, poisonous gases, various wastes including nuclear waste generated by

the people are seriously endangering the life on earth.

(b) A person may face a serious monetary problems for the medical treatment and

hospitalizations during life. In India, GIC and its subsidiary companies and LIC have

various health insurance covers for Indian nationals like: Ashadeep Plan II and Jeevan

Asha Plan II by Life Insurance Corporation of India and various policies by General

Insurance Corporation of India as under: Personal Accident Policy, Jan Arogya Policy,

Raj Rajeshwari Policy, Mediclaim Policy, Overseas Mediclaim Policy, Cancer Insurance

Policy, Bhavishya Arogya Policy and Dreaded Disease Policy. The most popular health

Insurance cover is Mediclaim Policy. A person between 3 months to 80 years of age can be granted mediclaim policy up to Rs. 5 lakh against accidental and sickness

hospitalizations during the policy period as per latest guidelines of General Insurance

Corporation of India.

(c) The health care demand is rising in India now days. Only 10% of Health Insurance

Market can be tapped till today. Still there is a scope of rise up to 35% in near future.

The Indian health care industry is now worth of Rs. 73,000 crore and expected to surge

by 10,000 crore annually as per market study. The share of Insurance market in above

figure is significant. Out of one BILLION population of India 315 million people are

estimated to be insurable and have capacity to spend Rs. 1000 as premium per annum.

Global Insurance giants like CIGNA, EAGLE STAR, ASTNA and ROYAL SUN

ALLIANCE have already into pacts for future mega business in India. Market research,

detailed planning and effective insurance marketing has become the prime need of the




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hour. Health insurance has a wider scope in present day situations in India. It requires

efforts to tap Indian health insurance market with proper understanding and training.

2.16 MEDICLAIM SCHEME OFFERED BY GIC AND

OTHER INSURANCE COMPANIES

The current statistics on health insurance indicate that out of 1 billion population only 3.8

million population is insured. The product of health insurance is new to the GIC and its

subsidiary companies. Health insurance represents very small percentage of overall

business.

There is also not much preference for present health insurance products. The government

insurance companies started health insurance in 1986 and thereafter Mediclaim has

revised and the companies have tried to make it attractive product. First there is used to

be categorywise ceilings on items such as medicine, room charges and later when the

policies were revised these intra ceilings were removed. After this the demand for

Mediclaim has picked up. People are becoming more and more aware of the policies andare asking questions about the rules of the policies. The GIC companies has little means

to monitor the scheme and we should understand that it is because of technical problems

there are number of cumbersome rules to many undesirable complications. It looks that

health Insurance is growing fast There have number of cases where the cases have been

refused to become of mediclaim polices. Age has been one such factor. It has been

observed that agents as well as insurance companies are reluctant to admit the persons

whose age is beyond 60. It is perhaps because of the reasons of adverse selection.

There is no information on what is course of action available to a person who wants to

become member of mediclaim. GIC companies have instituted mechanisms but this

information is generally not avail be to the customers. There is potential problem of other

following the similar practices. It was suggested that the prospectus should include

information on whom to meet in case of grievance or complaints.




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Time limit for renewal should be mentioned in the prospectus. It was observed that very

few people read the prospectus. To popularize the schemes it is important that proper

marketing is done. It will be possible if the insurance companies show efficiency and

reduce the price.

There is also problem of fraud and manipulation. The monitoring systems are weak and

there are chances that if the doctor and patient collude with each other, they can do more

harm to the system. There is no data on this issue.

2.17 PRESENTATION ON EMPLOYEE STATE

INURANCE SCHEMEIt is essential for the people to be healthy so as to contribute to the social and economical

development of a society and thereby to a nation. A healthy population makes a nation

prosperous by achieving developmental goals on all fronts. But the members of a society

are exposed to certain risks like sickness, maternity, old age, death etc. Moreover, social

and economic order also creates certain imbalances against which members of society

should have protection by society. Social Security aims at building a medico-social

organisation in a participatory approach that can safeguard the health and economic prosperity of people in the society. Social security based on the idea of liberty and human

dignity and its benefits are dispensed in a manner consistent with sense of self-respect

and principle of social insurance.

The social security expenditure is not merely consumption expenditure, but also an

investment because it enhances the productive potential of such workers & thereby of a

nation. So, pooling of risks, resources and benefits are the hallmark of any social security

scheme. Insurance is defined as 'coverage by contract whereby one party agrees to

compensate or agrees to guarantee the other against loss by specified contingent event or

peril'. In case of Health Insurance an insured party pays a premium and the insurance

company provides required services or pays the agreed sum spent on hospitalization in

the case of illness of the policyholder.




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There are two types of health insurance one is compulsory, which is economically viable

due to large number of participating persons and lesser administrative cost entailed. But

average health care quality and long waiting period with resultant dissatisfaction are the

disadvantages e.g. ESIS in India

and N.H.S. in U.K.

Under the ESI Act, 1948 ESI Scheme provides protection to employees against loss of

wages due to inability to work in exigencies like sickness, maternity, disability and death

due to employment injury and medical care to employees and their family members.

When implemented for the first time in India at two centres namely Delhi and Kanpur

simultaneously in February 1952, it covered about 1.2 lakh employees. Presently the

scheme is spread over 22 states and Union territories across India covering 91 lakh

employees and more than 350 lakh beneficiaries. The Act covers:

(a) all power using non-seasonal factories employing 10 or more Persons

(b) all non-power using factories employing 20 or more employees and

(c) establishments like shops, hotels restaurants, cinema, road transport and news papers

are covered. ESIC is a corporate body headed by Union Minister of Labour as Chairmanand the Director General as chief executive. Its members are representatives of central

and state governments, employers, employees, medical profession and parliament.

ESIC is made up of contributions from:

(a) Employees who contribute at the rate 1.75% of their wages (if daily wage is Rs.25 or

less, his contribution is waived)

(b) Employers who contribute at the rate of 4.75% of total wage bills of their employees

to contribution on behalf and for employees having daily wage of Rs. 25 or less

(c) State Governments who contribute 12.5% of total shareable expenditure worked out

by prescribed ceiling on expenditure which is Rs. 600 per insured person per annum and

expenditure incurred outside/over and above the prescribed limit.




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The State Government runs the medical part of this unified and integrated scheme of

social insurance meant for employees covered under the ESI Act 1948. This scheme -

compulsory and contributory in nature - provide uniform package of medical and cash

benefits to insured persons in implemented areas all over Gujarat through 11 hospitals

and 52 diagnostic centres and 124 dispensaries.

The delivery of medical care is through service (direct) system and/or panel (indirect)

system. It provides allopathic medical care, but medical care by other systems like

ayurvedic and homoeopathy in the states is also provided as per the state government

decision. The medical care consists of preventive, promotive, curative and rehabilitative

types of services are provided by the scheme through its own network or through

arrangements with reputed government or private institutions by concept of proper

referral system and regionalisation.

Preventive services include immunisation of pediatric population, maternal and child

health, family welfare services. Promotive services include health education and health

check-up camps. Curative services include: dispensary care, hospital care, maternity care,

supportive services including diagnostic centre, drugs, dressings, surgical procedures,

dental care, prosthesis and other appliances. Rehabilitative services include: physicalrehabilitation, economical rehabilitation, and provision of artificial aids (social,

psychological rehabilitation)

2.18 PARTICULARS IN INDIA

No. of Centers 632 32

No. of Insured Persons/Family Units 84,45,000 7,03,050

ESI Hospitals 125 11

Number of ESI Hospital Beds 23,334 2,035

ESI Dispensaries 1,443 124

Insurance Medical Officers 6,220 669

Insurance Medical Practitioners 2,900 102

ESIS, largest and premier social insurance scheme, provides comprehensive medical care

to its beneficiaries. It is expected, that quality of services provided will definitely




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improve and in the coming years it may be able to provide a definite base for extension to

other sectors to formulate a unified national health scheme.

There are many problem areas in managing this scheme that will need the attention of

policy makers.

These are: a large number of employers try to avoid being covered under the scheme, a

large number of posts of medical staff remains vacant because of high turnover and

lengthy recruitment procedures, there is duality of control, rising costs and technological

advancement in super specialty treatment, management information system is not

satisfactory.

India, one of the most promising countries of South-East Asia, has a large network of

health insurance cum social security scheme in the form of ESIS besides C.G.H.S. and

other health insurance scheme. The health insurance has not developed fully in India, but

if decision to open up medical insurance for privatisation is taken, there are many

opportunities for development of health insurance schemes for various sections of the

Indian society. Based on principles of sound management, equitable distribution and

evolution of long network and linkages, such organised and structured health insurance

schemes can be developed. For this purpose, first, regional network of health insurancecentres should be established. This lead to better cooperation among health care providers

by pooling their resources of manpower, training facilities to provide comprehensive

medical care services to one and all in that geographic area.

Secondly, efforts should be made to develop public-private partnership in tertiary health

care services (CT Scan, MRI, Cancer therapy) so as to increase utility of health insurance

service and to make them financially more viable.

The existing health insurance scheme like ESIS may be upgraded by covering

PSU/MNC employees under them, by making due budgetary provision to train and




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develop human resources, to allow to generate revenue by allowing access to affluent

class of society to avail tertiary medical care.

2.19 I NSURANCE AND SOCIAL SECURITYSCHEMES FOR THE POOR

With 70 per cent of population in India living in rural areas and 95 per cent of

work-force

working in unorganized sectors, and disproportionately large percentage of these

populations living below poverty line, there is strong need to develop social security

mechanisms for this segment of population. The most vulnerable group among these is

the women. The SEWA has developed an initiative to protect the poor women from

financial burdens arising out of high medical costs and other risks. Each member has

option to join the programme by paying Rs. 60 per annum and it provides cover for risks

arising out of sickness, maternity needs, accidents, floods and riots, widowhood etc. The

scheme is also linked with saving scheme. Member can deposit Rs. 500 in SEWA Bank

and interest on this deposit will cover the annual premium. SEWA started its insurance

programme with the support of one of the public sector insurance companies. The

experience of SEWA has been that the insurance companies are not well equipped tohandle the present day complexities of health insurance particularly responses it requires

to handle the specific issues in context of lower income groups. Given the bureaucratic

rigidities in settling the claims, procedures, which one has to follow, and poor monitoring

mechanisms make it difficult for the poor to continue with these schemes. For example,

the patients belonging to lower income groups opting for the schemes would need

systems which are simple, flexible, prompt, relevant, having less paper work and have

fewer tiers. The design of the product including what it covers, scope of coverage and at

what premium are important considerations for people belonging to lower income groups.

SEWA experience suggests that the design of the insurance products have to be

integrated with several add-ons that may be priced differently. For example, health risk

coverage should include sickness as well as maternity aspects. SEWA experience

illustrates that other aspects of risk which need coverage include natural (accidental)




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death, accidental death of women member (including disablement), accidental death of

member's husband (including disablement), loss because of riots/flood/fire/theft etc. The

overall premium has to be low.

The scheme has 30000 members and is expected to grow to 50000. There has been lot of

emphasis and education in the community on understanding the concept of insurance.

This awareness is growing. The linkage with the providers has been critical aspect in

keeping this cost of scheme down. At the same time the member has complete choice in

selecting the provider. It has been observed that costs in private are more than 5 times

than what they are in public, developing linkages with the public facilities is also critical.

This also depends on quality of care at public facilities. The overall impact of health

insurance has been encouraging and we find that women have started to seek health care.

The scheme has tried to address the special needs of women health and also allowing the

other systems of medicine, which is quite popular in various places. The up scaling of the

scheme is problem from viewpoint of management, organisation and finances and this is

major challenge.

2.20 INDIAN MEDICAL ASSOCIATIONS ROLE IN

CHANGING SCENARIO IN THE HEALTH SECTOR

Central to "Health for All" goal articulated in the historic 1978 declaration of Alma Alta

is a fundamental assertion that all nations should seek to improve the length of productive

life of the population and reduce disparities in health status among population subgroups.

Many variables, including per-capita income, housing and education influence health

status. Priorities for health care, medical practice and medical education must be guided

by the prudent use of financial, human and technical resources that are shown to improve

health. Countries that provide optimal health care, medical practice and medical

education demonstrate the following characteristics.




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(a) Cost effective public health and personal services provided.

(b) Financing policies promote health - effective financing policies must be in place that

reward systems and providers for improving the health of the individual and community

and place a premium on cost effectiveness. Public and private sector financing of medical

care should reward preventive care, effective treatment of acute illness and management

of chronic diseases in a way that maintains a person's optimal function and independence.

Financing should emphasize such elements as quality, continuity, and co-ordination of

care, as well as accessibility, acceptability and consumer satisfaction.

(c) Primary care emphasized - quality primary medical care should be available to all.

Adequate infrastructure such as clinical facilities, medical equipment, records and

staffing should be universally available.

(d) Appropriate utilization of secondary and tertiary care services - Individual seeking

care by a specialist physician should have initial contacts with a generalist. The physician

and the patient together should have adequate information regarding quality of care,

likely outcomes, and cost to determine whether consultative services of a specialist

physician are necessary. There are large number of men, women and children in the ruralcenters as well as towns, who because of poverty are unable to take advantage of medical

and surgical services or use the drug that may be prescribed for them.

To achieve the above goal, government alone cannot fulfill all the expectations required

by the society. The combined experience of mankind is today predominantly in favour of

state compulsory health insurance. One might naturally ask, "should not health insurance

be left to the independent will and responsibility of the individual." The answer would be

NO. Individuals will find it difficult to pay the premium to an insurance company as to

pay the doctor's fees or the druggist's bills. And among our agriculturists, artisans or

middle class men in India more than in other countries the surplus in the family budget is

so limited that the ability or willingness to pay the premium or the bill is non-existent.




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Besides, those who are in need can hardly appreciate the advantages of the "insurance

principles".

Indeed, if the combined experience of economically developed nations, e.g., Europe and

America is of any value, it has been proven the voluntary health insurance cannot be

depended upon either as an effective measure of health provision for the people or as a

measure of administrative economy.

Sickness must not be treated as a private misfortune. It is not to be regarded as a calamity

against which the individual should protect itself as much as it can. It is not even to be

counted as a misfortune in which the family alone is interested and therefore which the

family alone should attempt to combat or prevent. Rather, it is time to look upon sickness

as a national misfortune. We should take it as a calamity for the entire community and

therefore one to be prevented or cured by the community, and the State.

Remarkable in its social and moral bearing is the advantages conferred on the community

by compulsory sickness insurance legislation. On the one hand, the medical practitioner

is relieved of the burden of honorary service. On the other hand, the patient is spared the

ignominy of depending on the medical practitioner‟s benevolence or some philanthropic

institution's charity.

The financial burden of sickness cannot be borne by the individual. It must be widely

distributed through out the country. Premium is therefore to be paid by three parties, first,wageearner or salaried person, secondly, the employer, and thirdly, the state. Since the

premium is paid by a large number of persons, the healthy as well as the sick, the risk is

well distributed and the rates per individual can become very small. Besides, the social

goal derived from such a system is extensive.

As soon as the state and the community become financially responsible for the health

insurance of the individual the prevention of diseases is rendered almost on a fait

accomplish. In every scheme of sanitation and public health, compulsory health insurance

on a wide basis should be regarded as a great prophylactic.




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2.21 HEALTH INSURANCE AND ORGANISATION

AND STRUCTURE OF PRIVATE PROVISION

The implication of private sector coming in insurance is that the costs are definitely going

to increase. Given the present system of fee for service and current scenario of health

infrastructure in private sector, the development of insurance will need improvements in

quality. The new investments to improve quality will result into high cost and therefore

increase in prices of insurance products. There would be developments in the direction of

exploring options of managed care, which would help in reducing the costs. The

developments would be in the direction of developing strong information base and

accreditation system for providers. The models, which have emerged elsewhere need, to

be examined and their applicability to India situation need to be examined. These aspects

would need detailed programme of study.

There are also examples within the country, for examples schemes of NGO's like SEWA,

Tribhuvandas etc. These need to be looked into and strategies to upscale these examples

need to be studies. Since 70 per cent of population lives in rural India, the relevance these

schemes will grow.

We lack adequate information base to operate insurance schemes at large scale. Theinsurance mechanism prevalent in many developed countries has their history. Health

reforms experiences in many countries are replete with the suggestion that the systems

cannot be replicated easily. Self-regulation is an important in any market driven system.

The regulation from outside does not work. Implementation is difficult. We significantly

lack mechanisms and institutions, which would ensure self-regulation and continuing

education of provides and various stakeholders. The accreditation systems are hard to

implement without mechanisms to self-regulate. For example it took 35 years in US to

put the accreditation system effectively in place. For example, it has been difficult for

many States in India to put nursing homes legislation in place. So it is important to

understand the real situation of India.

CONCLUSION




BIBLIOGRAPHY

Dr. Ashok Shani, “HOSPITAL AND HEALTH ADMINISTRATION”(Indian Society

Of Health Administrators, thane , 2013)

WEB ADDRESS

www. Billroth hospitals.com

www.cdc.gov/nchs/data/misc/employer.pdf

www.health.utah.gov/upp/pdf/employer health

www.eric.org/forms/upload files/pdf

http://www.cdc.gov/nchs/data/misc/employer.pdf

http://www.health.utah.gov/upp/pdf/employer

http://www.eric.org/forms/upload

http://www.eric.org/forms/upload

http://www.health.utah.gov/upp/pdf/employer

http://www.cdc.gov/nchs/data/misc/employer.pdf

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