Unorganised Workers' Health Insured

Sudha Pillai

Rashtriya Swasthya Bima Yojana (RSBY) keeps unorganised, illiterate, semi-literate, preponderantly poor and largely self-employed employees who migrate from place to place in search of wage employment in mind

Workers in the unorganised sector constitute about 94 per cent of the total workforce in India. One of the major reasons of insecurity for such workers is their inability to find the funds for medical care for themselves, and their family members. Despite considerable expansion in health facilities, illness and loss of income due to illness remains one of the most prevalent causes of deprivation and poverty in India. Most efforts to provide health insurance in the past have faced difficulties in both design and implementation. According to the NSSO study done in 2004, the average out-of-pocket payment made for hospitalisation by the poor is almost Rs 5,700 and on an average 52 per cent of the people are indebted on account of in-patient care. In the poorest States, the percentage of indebtedness on account of in-patient care goes up to 64 per cent. Even in middle income and high income States, 60 per cent and 52 per cent people respectively are forced to take loans to pay for health care.

RSBY: Target, Timelines & Entitlements 
The Rashtriya Swasthya Bima Yojana (RSBY), which rolled out in April 2008, seeks to address the plight of such people by covering below poverty line (BPL) unorganised sector workers and their families from 2008-09 to 2012-13. The scheme design has kept these preponderantly poor and largely self-employed employees who migrate from place to place in search of wage employment, unskilled, semi-skilled, illiterate and semi-literate employees in mind. The scheme also seeks to address a situation where only one member of such a family migrates in search of work and others stay back. In all, the scheme intends to cover 60 million BPL families (aggregating to 300 million persons) in 600 districts of the country by 2013. 

A beneficiary under the RSBY is eligible for a benefit of Rs 30,000 per annum on a family floater basis comprising five members. The scheme covers pre-existing illness and has minimum exclusions for hospitalisation and even surgery, which can be provided on a day care basis. Even though out-patient facilities are not covered under the scheme, out-patient consultation is free. The scheme provides for cashless coverage of all health services in the insurance package and also provision for pre and post hospitalisation expenses for one day before and five days after hospitalisation. There is provision for transport allowance of Rs 100 per visit subject to an annual ceiling of Rs 1,000.

The government of India contributes 75 per cent of the estimated annual maximum premium of Rs 750 per family per annum. Additionally, the Central Government also bears the cost of the smart card subject to a maximum of Rs 60 per card. In the case of Jammu & Kashmir and North-eastern States, the centre contributes 90 per cent cost of the premium. At the time of enrolment, the beneficiary is required to pay only Rs 30 per annum as registration or renewal fee. State Governments are picking up the administrative costs with regard to elements that are not included in the premium cost. The Union Budget has extended RSBY to MNREGS beneficiaries and beedi workers. There are a large number of beedi workers who work from home and inhale tobacco dust. 

Smart Application
The scheme centres around a Smart Card, which enables cashless transactions as well as inter-operability in network hospitals throughout the country. The card also facilitates foolproof biometric identification of the beneficiary. Smart Card service providers issue the card to the beneficiary on behalf of the insurance company. Ownership of the card, however, remains with the Central Government for its use in subsequent years and for other purposes. 
The photograph of the head of family appears on the face of the card. However, biometric particulars of other members of the family can be added subsequently alongwith the biometric at the time of issue of cards. In view of the possible migration of BPL workers, there is a facility of split card under the scheme, provided the total amount on both the cards is equivalent to the value available on the primary card. Service providers will be responsible for providing transaction software to the hospitals for reading and operating the data on the smart card. A back-end database management is to be put in place for transmission from hospitals to a designated server and for electronic settlement of claims to make the scheme not only cashless but also paperless. In all, eleven sets of software are being used to ensure effective use of Smart Cards under RSBY.

Security for the entire process of issuing and use of Smart Card is sought to be ensured through an elaborate key management system (KMS) which has been evolved by the National Informatics Centre (NIC). A Central Key Generation Authority (CKGA) has been set up for creating root keys and to manage the entire key management system at the central level.

Role of Intermediaries
The intermediaries between the insurance companies and the beneficiary – third party administrators, NGOs, Panchayati Raj Institutions or a combination of these depending upon the requirement in each region and capacity of the intermediaries – have a very important role in carrying the scheme to the latter.

Monitoring and Evaluation
Monitoring of the progress of the scheme is taking place at various levels (district, State and national) by respective Governments and insurance companies. A robust IT enabled back-end database management is being evolved to facilitate monitoring. The World Bank has engaged an external agency to carry out a benchmark survey that would be used subsequently for evaluating the scheme as well as for undertaking an impact analyses.

Challenges Faced So Far
The biggest challenge for the scheme has been the problem faced with regard to the database of the beneficiaries. These databases were either incomplete or when complete were not in the desired format. Considering the volume of data, it has been a stupendous task to get the data in shape. The other problem was there was a big gap in demand and supply of hospital beds under the RSBY. While in ESI, the supply exceeded the demand, in RSBY it was reverse. Therefore, we amended ESI laws to include RSBY.

RSBY Gets Going
The scheme became operational from 1st April 2008. The response of the State Governments and other stakeholders has been encouraging. Most of the complex IT applications have been put into operation and are stabilising. By 1st March 2011, 20 million Smart Cards have been issued.

Unique to the Scheme
A special feature of the scheme is that the tender is open to both public and private insurance companies who meet the standards fixed by the Insurance Regulatory and Development Authority (IRDA). Under the scheme, 725 medical and surgical procedures have been listed along with costs so as to prevent over charging and subjectivity. In the case of an ailment falling outside this list, there is a procedure for pre-authorisation. 
RSBY operates on a viable business model providing opportunities for all the key players, like insurance companies, hospitals, smart card service providers and the intermediaries. There are incentives for private sector health providers to set up health-related infrastructure. Moreover, since the volume of smart cards is large, smart card providers have the incentive to deliver the cards even in the rural areas. Insurance companies obviously can also make decent money on account of the proposed volumes. 
A healthy tension between hospitals and insurance companies, where the former would want more patients and operations while the latter would want the opposite, enables us to monitor claims data as it comes in.

Road Ahead
Vertical and horizontal coordination among the various stakeholders poses the biggest challenge even after the stabilisation of a variety of software that is being used to rollout the scheme. The back-end database management throws up a different challenge in terms of developing the structure and putting in place the hardware. There are also questions like who will own and manage these structures and who will own and manage the database. The challenge is also not merely of quantity but also of quality of service by various service providers.
There are so many ways of moving in the direction of greater inclusion. But all are like the cherry on the cake if you do not have adequate wages. In any policy on inclusion, you have to first ensure adequate wages. We do have a minimum wages law that is different in each State. The wages in some States are extraordinarily low. We need to actually have a nationally mandated minimum wage. That is something which the country requires. Two things - mandated wage and social security for the unorganised workers - are the need of the hour. 

Sudha Pillai is Member-Secretary, Planning Commission

(The views and opinions expressed in this article are those of the author and do not necessarily reflect the views of INCLUSION. Comments are welcome at

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