The Union Ministry of Labour has done well to raise the salary cap for availing Employees’ State Insurance (ESI) to Rs.25,000. While the move is expected to expand coverage to an additional five million workers and their dependents, this is still small comfort in a country where barely three per cent of the workforce enjoys any social protection. The evolution of ESI has been characterised by an accent on widening its reach across various categories of industry and geographic regions. For instance, the relevant 1948 Factories Act originally applied to non-seasonal factories that employed 10 or more persons. Over the years, transport undertakings, hospitals, newspapers, the hospitality industry and educational institutions have been brought within its ambit. The 2010 amendments raised the age ceiling for dependents of employees to 25 years. They even envisage the provision of medical benefits under the ESI to workers in the informal sector — that is, those outside the current employer/employee contributory system. The need to enlarge the scope of medical services can hardly be overstated in an economy where the overwhelming proportion of the workforce remains outside the formal sector. Moreover, out of pocket expenditure on health, at 67 per cent of India’s total spending on health as per the Planning Commission figures, is the highest in the world. Critics of the latest revision of eligibility for ESI cover must appreciate that any reduction in medical expenses is a potential boost for consumer spending.

Of course, any contributory provisioning of medical treatment is at best a short-term solution in a largely poor country. The Union government has already committed to enhancing its plan and non-plan expenditure on health to 2.5 per cent of GDP. Moving quickly from this, India must adopt a system of universal health coverage that is entirely tax-funded and cashless at delivery, as recommended by the Planning Commission’s High Level Expert Group. Its watershed 2011 report advocates a comprehensive approach to health care that transcends conventional forms of illness response and insurance schemes that divert huge resources into expensive hospitalised treatment. The emphasis is instead on prevention, primary care and augmenting the social determinants of health such as basic sanitation, clean drinking water, minimum wages and primary education. Significant among the HLEG’s recommendations are the merger of the National Rural Health Mission and the Rashtriya Swasthya Bima Yojana into the UHC to better advance their social objectives. A healthy population is critical to realise the collective dream of making India an economic power-house. UHC is much more than a means to that end.

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