Health insurance for informal sector : case study of Gujarat

3607 I t is estimated that about two-fifths of India’s GDP originates from the informal sector and almost 90 per cent of families depend on this sector for their livelihood. Despite this fact, a large number of workers engaged in the informal sector in both rural and urban areas are illiterate, poor and vulnerable. They live and work in unhygienic conditions and are susceptible to many infectious and chronic diseases. These workers neither have fixed employer-employee relationship nor do they obtain statutory social security benefits [Ahmad et al 1991]. They do not have the bargaining power to fight discrimination and victimisation for protecting their right to a minimal standard of living. The persistent poverty and disease syndromes have pushed the families of the unorganised sector workers into debt to meet their day-to-day contingencies, which certainly includes health care. The latter is the subject of this paper. The studies on the use of health care services show that the poor and other disadvantaged sections such as scheduled castes and tribes are forced to spend a higher proportion of their income on health care than the better off. The burden of treatment is unduly large on them when seeking inpatient care [Visaria and Gumber 1994; Gumber 1997]. The high incidence of morbidity cuts their household budget both ways, i e, not only do they have to spend a large amount of money and resources on medical care but are also unable to earn during the period of illness. Very often they have to borrow funds at very high interest rate to meet both medical expenditure and other household consumption needs. One possible consequence of this could be the pushing of these families into a zone of permanent poverty. On the other hand, there are issues related to accessibility and use of subsidised public health facilities. A majority of the poor households, especially the rural ones, reside in backward, hilly and remote regions where neither government facilities nor private medical practitioners are available. They have to depend heavily on poor quality services provided by local, often unqualified practitioners and faith healers. Further, wherever accessibility is not a problem, the primary health centres are either dysfunctional or provide low quality services. Overall about 6 per cent of the household income is spent on curative care which amounts to Rs 250 per capita per annum [Shariff et al]. The burden of expenditure on health care is however unduly heavy for households belonging to informal sector indicating a potential for voluntary comprehensive health insurance schemes for such sections of the society. It is estimated that only a small fraction (less than 9 per cent) of the Indian workforce is covered by some form of health insurance through central government health scheme, employees state insurance scheme and Mediclaim; a majority of the covered population belongs to the organised sector [Gumber 1998]. Further, the low level of health insurance coverage is due to the fact that government policies have been designed to provide free health services through the public sector. The reality however is that the public sector health agencies on the one hand charge for their services and on the other hand have a poor outreach both in terms of quantity and quality. Also, public insurance companies so far have paid very little attention to voluntary medical insurance because of low profitability and high risk coupled with deficient marketing and management strategies. Hence a majority of the rural and urban slum population in India remains outside the health insurance system. This could be due to lack of information regarding available health insurance schemes or because the mechanisms used by the health insurance providers are not suitable to them. There is also a gender bias with men having better access to health care when compared to women due to socio-economic and cultural reasons. More specifically, poor women are most vulnerable to diseases and ill-health due to unhygienic living conditions, heavy burden of childbearing, low emphasis on their own health care needs and severe constraints in seeking health care for themselves. Institutional arrangements have so far been lacking in correcting these gender differentials. This study, undertaken on a pilot basis, attempts to explore some critical issues relating to the availability and needs of health insurance coverage for the poor and especially women, and the likely constraints in extending current health insurance benefits to workers in the informal sector. The objectives of the study were: (i) to estimate the burden of health care expenditure on households, protected under varied health insurance environments; (ii) to assess the extent to which health insurance has helped in mitigating the burden; (iii) to estimate the demand for health insurance and willingness to pay for services; and (iv) to suggest an affordable health insurance plan for workers in the informal sector.