Panel suggests hive-off of ESIC medical service

NEW DELHI: The Employees State Insurance Corporation (ESIC) should set up subsidiary corporations and make them fully responsible for medical benefit reimbursement expenditure, of which one-ninth would be borne by the state governments and another one-ninth by the Centre, the ESIC review panel has recommended.
In effect, this would mean that ESIC takes administrative control of the services even at the state level through a state-level subsidiary corporation. State governments, by the recommendations, would have to foot one-ninth of the total medical expenses while the ESIC would foot 7/9th of the expenses. At present, with a lower wage ceiling, the state government foots 1/8th of the expenses and the ESIC, 7/8th of the total expenses.
Any expenditure above the monthly wage ceiling for insurance coverage — and a hike has been recommended from the current Rs 6,500 (gross) to a minimum of Rs 9,000 (gross) in order to make the scales for eligibility more realistic — should be shared between the state government and the ESIC on a 50:50 basis, the report has held. Rectifying a glaring long-pending anomaly, the panel has also recommended that the wage ceiling be automatically adjusted every year (instead of the current two-year interval) in consonance with the consumer price in dex (CPI) for industrial labour.
Exploring the bifurcation of ESIC into two divisions, ie, medical and insurance, was a term of reference of the review panel headed by SC Verma.
The report will now be studied by the labour ministry and subsequently referred to the next formal meeting of the ESIC for ratification. The meeting, which will have to approve key changes in the ESIC Act should they be endorsed, is to be held within the next two months. Setting up subsidiary corporations would be one among the key changes to be considered.
Another key suggestion is that no new ESI hospitals and dispensaries should be constructed and additional services should only be provided through tie-up arrangements or IMPs or both. ESIC should concentrate only on maintaining and upgrading infrastructure, the Verma panel has maintained. It has also recommended bringing down the threshold of coverage from the present ten employees to five employees or more for coverage of factories and establishments under the ESI Act. This apart, speedy extension of social protection under the ESI scheme to unorganised sector is stressed upon.
Upgrading the eligibility for medical services under the scheme, the committee has recommended enhancement of ceiling on expenditure of medical benefit from the present Rs 600 to Rs 850 per insured person per annum, to be reviewed every two years in consonance with the CPI for industrial workers. State governments — which in either case have been reneging or delaying blithely on reimbursements to beneficiaries since they have to pay beneficiaries first and then claim reimbursement from the ESIC — had contended that their actual spending averaged to Rs 1,000 per insured person per annum, while the average worked out by the review panel stood at Rs 860 only last year. Not surprisingly, the hike was opposed by employers who have to contribute 4.75% of the wages while employees contributed a corresponding 1.5%.
On the question of including fast-growing new services into the scheme, the panel has suggested that pilot projects be taken up in metros to explore the functionality of separate funding for this so that current beneficiaries do not complain that their contribution is being used towards this. State governments should foot the administrative expenses for setting up a separate mechanism for this. Ironically, the recommendations for realignment have come six years too late going by the sharp decline in the number of beneficiaries through the 90s for a variety of reasons not the least of which is non-compliance by state governments on the plea of financial inabilities. Also, with the number of blue-collar workers in the organised sector going down, beneficiaries dropped to 72 lakhs from the previous 84 lakhs over the last 7 years.