Cash-rich ESIC asked to set up more hospitals, make its facilities available to public

By: |
August 19, 2020 6:00 AM

Given ESIC's Rs 80,000-crore reserve funds, it is also being nudged to build more modern hospitals across the country and provide cashless healthcare services to attract people with health insurance coverage.

ESIC is tasked with giving insurance cover and free medical care to those earning monthly wages of up to Rs 21,000.ESIC is tasked with giving insurance cover and free medical care to those earning monthly wages of up to Rs 21,000.

With Employees’ State Insurance Corporation (ESIC) hospitals’ utilisation level at less than 40%, compared with over 100% for government hospitals, the cash-rich corporation has been asked by the government to open its hospital facilities to the public for a fee.

Given ESIC’s Rs 80,000-crore reserve funds, it is also being nudged to build more modern hospitals across the country and provide cashless healthcare services to attract people with health insurance coverage.

Ever since its inception in 1952, the ESIC has set up 159 hospitals and 1,500 dispensaries across the country.

After a long 22 years, the government cut the mandatory contribution to the ESI medical care scheme for relatively low-wage earners to 4% from 6.5% in June last year, but this is a case of too little, too late.

With its income far exceeding expenses, the ESIC has over the years accumulated huge amounts as reserve funds — at the end of FY18, this was a staggering Rs 74,348 crore, 70% of which are not earmarked for any purpose and therefore, free. While the surplus for FY19 was estimated at Rs 9,351 crore, the size of reserves are believed to have risen to about Rs 84,000 crore by the end of FY19.

ESIC is tasked with giving insurance cover and free medical care to those earning monthly wages of up to Rs 21,000.

Appropriating funds of the ESIC for any other purpose than its mandate is ruled out, sources said, adding that it provides a cushion against risks like the ongoing Covid-19 pandemic to meet the commitments to the subscribers.

However, a portion of the funds could be used to build new healthcare facilities for the subscribers (free) as well as members of the public for a fee to compensate for depletion in reserves due to construction of new hospitals. Such a move would increase utilisation level of ESIC hospitals and reduce the burden of government hospitals to some extent.

ESIC is mandated to provide protection to employees against the impact of incidences of sickness, maternity, disablement and death due to employment injury and to provide medical care to insured persons and their families. The ESI Act applies to premises/precincts where 10 or more persons are employed. The Act now applies to over 12.11 lakh factories and establishments across the country, benefiting about 3.49 crore family units of workers.

From July 1 last year, an employee pays just 0.75% of the wage towards the ESI kitty, against 1.75% earlier, while the employer contributes 3.25% (4.75%).

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