The corona pandemic underscores the need for the government to recast social security and health insurance benefits for workers and delink them from their jobs. The Employees State Insurance (ESI) scheme offers an organised sector employee medical care. But the benefit ceases when the worker loses her job. The government should delink these benefits that are tied to a worker’s job and link them to the individual, as workers move towns and jobs, from regular jobs to gigs and back. Even when they lose their jobs, they would still have health insurance and social security benefits.
This is already happening. The National Pension System (NPS) has made retirement saving portable across jobs and geography. The ‘one-nation, one-ration card’ scheme unbundles the ration card and makes individual entitlements portable across India. You could say Ayushman Bharat works this way, too. However, it is a regular insurance scheme, where hospitals are paid for treating people. The incentives are all misaligned. The more the hospital spends on investigations, procedures and medication, the more the profits. Rather, the payment should be for taking care of the health of a defined population, paid in advance. In this scenario, the incentive is to keep the person proactively healthy and give efficient care, minimising costs. Fear of reputational damage, competition among healthcare providers and regulation can guard against deficient care. In such a scenario, total healthcare expenditure can be contained at about the same level as it costs in Britain and its functional National Health System, about 7% of GDP. In the US, missing unemployment benefits combine with job-linked health insurance to push Covid patients to turn up for work and infect others. India must draw the right lessons.
The question is how to pay for all this. Tax collections are yet too small for the government to foot the bill in its entirety. A certain portion of the earnings of all workers, including gig workers, can be diverted to pay for healthcare and social security. The government can pay for the poor.