1. SOCIAL HEALTH
INSURANCE
Nehal Jain
Institute of Public Health

2. Definition of Social Health Insurance
 Social health insurance is usually a health
insurance scheme with specific characteristics:
• Targets the formal sector
• Is funded by a compulsory pay roll tax
• The premium is usually income rated, i.e. the
lower employees contribute a smaller
premium compared to the higher employees.

3. International Experience
 The classical example of a SHI is the German or Belgian
health insurance system. Here, employees and employers
contribute to a “mutual fund(s)” that is then used to finance
the health care for the entire population. Citizens have to
enrol compulsorily in one of these mutual funds. The
government also provides significant funding to cover those
who are not able to contribute.
 Recently, Vietnam, which is a low-income country, has
introduced SHI and successfully covered most of its
population. The same goes for the Philippines, which has
managed to cover more than 50% of its population in a
short time. Kenya and Tanzania are also embarking on
ambitious plans of SHI to cover their population.

4. Social Health Insurance in India
 In India, there are three important schemes, the
ESIS, the CGHS and the Railways Health
Scheme.

5. Employee State Insurance Scheme
(ESIS)
 Established in 1948, the Employees State
Insurance Scheme (ESIS) is a social security
system, which provides both cash and medical
benefits.
 Eligibility: Lower paid workers of the formal
sector, especially industries. (only those workers
with a salary of less than Rs 10,000 per month
can join the ESIS)

6. Employee State Insurance Scheme
(ESIS)
 Contributions – both by employees and
employers (4.75% and 1.75% of their payroll
respectively)
 Benefits – comprehensive cover, including OP,
IP and rehabilitation
 Managed by the ESIC
 Presently covers 47 million members

7. Problems
 Less than half the enrolees use the ESIS facilities
because of the low quality of care.
 This is further compounded by the rude and impudent
behaviour of the ESIS staff, shortage of staff, inadequate
drug and supplies and non-functional equipment.
 Many of the staff are not aware of the benefits. The
employers also do not disseminate the information to
their staff. Further some employers manipulate records
to make the staff ineligible for the benefits. Also because
of the salary limits on eligibility, some staff keep shifting
in and out of the ESIS and they may not be aware of
their eligibility status.

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

9. The Central Government Health
Scheme (CGHS)
 The staff contributes a nominal amount (ranging
from Rs 15 to Rs 150 per month) from their
salaries.
 The benefit package includes both outpatient
care and hospitalisation.
 OP care is provided through its own
dispensaries, 320 in 2002 in 17 major cities. It
also uses the facilities of the government and
approved private hospitals to provide inpatient
care and reimburses the expenses to the
patient.

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

11. Advantages
 A healthier work force as they are covered, and so have
easy access to health care.
 SHI produces a stable source of income for health care and
which is independent of the Ministry of Finance and not
subject to budget fluctuations.
 It provides additional source of funds to the health sector, as
there are contributions from the employees and the
employers.

12. Advantages
 A mandatory scheme saves money in marketing the
product. Also a mandatory scheme ensures that there is
significant enrolment, minimising some of the inherent
problems of health insurance. SHIs with a large pool can
negotiate with providers for better quality of services
 There is considerable pooling between the rich and the
poor, between the sick and the healthy and between the
young and the old. Thus the young, rich and healthy
cross-subsidise those who need more health care.
 There is more equity, because of the income rated
premiums – the premiums are collected in terms of
ability to pay, rather than the need for health services

13. THANK YOU