Scant cover: Hospitals in a mess, ESIC blames state governments

The Employees State Insurance Corporation (ESIC) charges exorbitant rates for the scant cover it offers to the lakhs of workers, but seeks to justify the practice, by citing the establishment costs and running expenses of dozens of hospitals built by it. Even that argument has now come crumbling down, with the corporation itself admitting to the poor infrastructure and medical facilities at most of the 155 hospitals built by it.

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At a meeting on Monday, the ESIC Board decided not to hand over the management of any of its upcoming hospitals to state governments, given that among 110-odd ESIC hospitals run by the states, a vast majority are in a shambles. The average occupancy rate of hospitals run by state governments is just around 40%; several hospitals don’t even have adequate number of qualified medical staff, including doctors and nurses, and many are merely operating as dispensaries.

Sunil Sirsikar, who is on ESIC Board and also serves as national secretary, Laghu Udyog Bharti, said, “States get readymade hospitals from ESIC and get funds from ESIC to run them. But most states have made a mess of the whole thing and as a result, the ESIC is getting a bad name. Insured persons are not satisfied. So, ESIC has taken a decision not to hand over new hospitals to the states”.

ESIC has around 26 under-constriction hospitals and 16 at the conceptual stage now.

With its income far exceeding expenses, the ESIC has over the years accumulated huge amounts as reserve funds — at the end of FY19, this was a staggering Rs 91,447 crore, and 75% of the reserve is not earmarked for any purpose and therefore, free. And the surplus is rising year after year.

Surplus in FY19 was at Rs 16,227crore, with incomes of Rs 27,313 crore and expenditure at Rs 11,085 crore. In 2018-19, ESIC spent Rs 8,721 crore on extending medical benefits, Rs 1,171 crore on cash benefit payments and Rs 1,156 crore was administrative expenses.

The ESIC is also trying to take over existing hospitals, where there are complaints of mismanagement. “But state governments are not very cooperative…in many cases, states have taken funds from ESIC and used the money to employ doctors in their own hospitals. This creates problem for MSME employees. The employers complain of the poor facility, but they are duty-bound to subscribe to the ESIC and that’s why they have to deduct their contribution from their salaries (for ESIC benefits,” Sirsikar said.

Of course, ESIC is not equipped to take over all the hospitals immediately, as it will require centralised administration. “ESIC does not want to take over those hospitals which are running well. In Kolkata, there are some hospitals which are being run well, there are good hospitals in Kerala, Punjab and Delhi too,” Sirsikar added.

ESIC used to run only three hospitals in 2013 but is now running over 45 hospitals. “Hospitals run by ESIC are administered well, in terms of OPD and equipment, they maintain certain standards. Footfalls are, however, less in the hospitals run by the states. If ESIC takes over all badly-run hospitals, it will serve the larger interest of the beneficiaries,” another ESIC official said.

With effect from July 1, 2019, the government lowered the mandatory ESIC contributions: an employee now pays just 0.75% (1.75% earlier) of wage towards the ESI kitty, while the employer contributes 3.25% (4.75% earlier). The contribution rate was brought down in 2019, after a long period of 22 years. Experts described the move as a case of “too little, too late”, given the huge reserves the ESIC has created over years.

The government had, with effect from January 2017, enhanced the threshold limit of mandatory coverage under the ESI scheme to a monthly wage of Rs 21,000 from Rs 15,000 earlier.

Over 12 lakh factories/establishments are under ESIC cover under the Employees’ State Insurance Act, 1948.