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Journal of the Academy of Hospital Administration

'What it Costs and What they Get' - A Study of Percieved Costs and Benefits Among ESIS Beneficiaries

Author(s): S. Bedi, S.K. Arya, D.K. Sharma, R.K. Sarma

Vol. 17, No. 2 (2005-01 - 2005-12)

Keywords: Social health insurance, health financing, out-of-pocket expenditure, perceived cost and benefits, direct and indirect costs, access to healthcare

Key Messages:

  • ESIS is a pro-poor healthcare financing option and is well understood by those currently its beneficiaries
  • The scheme has a potented it be extended to general public with additional inputs

Abstract:

The recent increase in healthcare costs due to various reasons has limited access to healthcare for poor people and most of the expenditure on health is ‘out-of-pocket’. Health is widely regarded as a ‘merit good’ -and therefore, access to healthcare should not be limited by socio-economic or other reasons. Social Health Insurance is a system of pro-poor health financing mechanism which incorporates risk-pooling and protects the poor from expenses associated with major illness. However, any system of health financing that is propoor should be able to pay for healthcare, protect the poor from financial shocks associated with severe illness and enhance accessibility of services to the poor.

A pre-requisite for developing a pro-poor financing mechanism is an adequate understanding of the circumstances, needs and potentials of the poor people and barriers to access. For this, a study was conducted in an on going Social Insurance Scheme in India i.e. ESIC. A random cross sectional survey was carried out among patients visiting the ESI Dispensaries, which are the primary care providers in ESIS. Study revealed that beneficiaries use ESI Healthcare facilities more in case of perceived major illnesses whereas private healthcare facilities are used in case of minor illnesses. The reasons for this health seeking behaviour are perceived costs and accruing benefits i.e. economic considerations. A large majority of beneficiaries are satisfied with the facilities provided. The dissatisfies are factors which are viewed as costs paid for receiving benefits, the major one being perception of too much time consumed per visit to ESIHealth care facility, The perceived Cost-Benefit Analysis shows that 55% beneficiaries perceive the benefit to be more than the cost, 26.7% perceive cost to be equal to benefits and only 18.3% perceive cost to be more than benefits.

The ESIC experience can be used as a launching pad for extending this scheme or designing new ones for general public.

Introduction:

The recent increase in healthcare costs due to various reasons has limited access to healthcare for people who need it mostthe poor and the disadvantaged. Most of expenditure on health is ‘out-of-pocket’. This makes access to healthcare more difficult for those in self-employment or in the unorganized sector especially in event of major illness. The current focus of the international debate is on the need to move away from the excessive reliance on out-of-pocket payment as a source of health financing towards a system which incorporates a greater element of risk-pooling i.e. health insurance and thus affords greater protection for the poor.(1) Health is widely regarded as a ‘merit good’ – i.e. a commodity that ought to be available for use by everyone, irrespective of ability to pay and therefore, access to healthcare should not be limited by socio-economic or other reasons. Though this would be the ideal situation, but is quite difficult to meet for most developing and low-income countries.(2)

The core values of social health insurance embody a concern for the poor. Health Insurance is one of the mechanisms to overcome this barrier in accessing healthcare and thus reduces the individuals’ exposure to risk. This reduction in uncertainty is of value in itself, particularly for the poor. Any system of health financing that is pro-poor should encompass the following attributes.(3)

  • Ability to pay for healthcare
  • Protect the poor trom financial shocks associated with severe illness.
  • Enhance accessibility of services to the poor (particularly with respect to perceived quality and geographical access)

Financing and provision aspects of health care are closely linked. In particular, enhancing access by improving perceived quality of care is closely linked to the question of how to create a pro-poor financing system. However, there are certain barriers to accessibility:

  • If the perceived quality of care is very low, even the poor may prefer to pay more to use higher quality private sector services.
  • There may be significant time and transport costs associated with accessing care, particularly for the poor.
  • Indirect costs are also associated which primarily mean loss of daily wage.

Poor peoples’ access to healthcare is often constrained by low quality care, high transport costs, long waiting times and inconvenient opening hours. Financial reforms that deliver improvement in these dimensions of quality at a moderate price, particularly in relation to hospital care, will probably benefit the poor.

International experience with social health insurance

Certain authorities have argued both for and against the social health insurance system. A study on the reforms needed in the British healthcare system argues that certain questions will help put social health insurance on a more evidence based footing.(4) These are:

  • Value for money: Can individuals tell whether they area getting good value for money? It may not be possible for taxpayers using government run hospitals to make a well informed judgment for value for money because many have no knowledge of the amount being paid. In contrast social insurance schemes allow individuals to clearly see what is being paid (deducted as premium)
  • Standard for care: Do poor people enjoy a high standard of care? Since very few standards exist as far as India is concerned, how does the standard of care provided in ESIS compare with that being provided by the government run hospitals?
  • Patients as customers: – Does the healthcare system put the customers in weak or strong position? Even in the developed countries it is found that patient satisfaction rates are higher in the countries that have a social insurance scheme, where they are treated as valuable customers.
  • Balancing expectations and resources: -Funding healthcare from general taxation has proved to be an ineffective way of bringing the expectations of patients into balance with the treatment capacity of the system. Social health insurance systems leads to a higher spending than tax based systems, thereby increasing chances of patient satisfaction.(5)

Studies have been conducted detailing the experiences of the beneficiaries of social health insurances in various countries.

A study from the West Bank: and Gaza Strip, Palestine indicates health insurance coverage of 42% among households. Only 33% of households were satisfied with the services available under the insurance scheme. About two thirds of households without insurance stated that they would like to have insurance. The main reason for non-enrollment was the high premium level.(6)

A study on the health-seeking behavior among insured persons under the Social Security Act in Thailand has found that beneficiaries did not seek health care from non-registered health facilities or indulge in self-care.(7) The Vietnamese experience has showed that, overall, insured patients are more likely to use outpatient facilities, and public providers, an effect that is particularly strong at lower income levels.(8)

Other studies have shown that patient expectations of access, choice and convenience are factors in shaping new models of health care delivery. Appropriate timing is the key determinant of the success of reforms.(9)

THE ESI SCHEME

The Employees State Insurance Corporation (ESIC) is a beacon of social security in India, and the biggest social security organisation in Asia. An autonomous body under the aegis of the Ministry of Labour, it is an integrated social security scheme fostered to provide social protection to workers in the organised sector and their dependants in contingencies, such as, sickness maternity or death and disablement due to an employment injury or occupational disease. The scheme tailored to suit health requirements of workers, provides full medical facilities to insured persons and their dependants as well as cash benefits to compensate for loss of wages or earning capacity in different contingencies. The ESI Act 1948, as it is called, also guarantees reasonably good medical care to workers and their dependants.

The ESI has one of the largest medical infrastructures in the country, with the important healthcare indices such as bed: population ratio and doctor: population ratio far better than national average.(10)

The ESIC as a ‘Managed Care’ system

On a macro level, ESI itself is a “Managed Care” system of sorts, with many of the requisite features already in place:

  • Premium based health insurance (payroll deduction)
  • Limited consumer choice of GP/ Primary physician (fixed dispensary allocated)
  • Primary Care Gatekeeper (access to secondary care regulated by primary care physicians)
  • Referral to specialists and hospital treatment (availability of secondary & tertiary care on referral)

Some of the advantages of managed care systems exist whereas some may not be available as yet. There are obvious differences between the two systems, such as accreditation of healthcare facilities, utilization reviews, DRG payment systems, co-payments etc. Within the US, Medicare and Medicaid provide social health insurance, where the contribution of the insured persons is not merely the payroll deduction, but also co-payment in most cases. Even so, the level of patient satisfaction is higher in countries where social insurance exists.(11)

Table-1: Information about ESIC (10)

Insured Persons 85 Lakhs
Insured Women 14.05 Lakhs
Dependant Family 248 Lakhs
Members Total number of beneficiaries 347Lakhs
Total number of factories covered 2.48 Lakhs
Total number of ESI hospitals 141
Diagnostic Centres 307
Dispensaries 1452
Panel Clinics 3000
Annexes 43
Insurance Medical Offers 6240
Panel Doctors / Part Time Medical Officers ll MP 2789
Total numbers of beds 26652
Bed Population Ratio 3.45 beds/lOOO Population
Specialist Centres 322
Doctor-Population 1: 585 ratio

With the need to provide healthcare services to the nonorganised work force of our country, some kind of model may need to be designed. For this it is essential to know how existing beneficiaries perceive the cost to them vis-a.-vis the resultant benefit provided to them and whether this Scheme has been able to achieve the aforementioned objectives. A pre-requisite for developing a pro-poor financing mechanism is an adequate understanding of the circumstances, needs and potentials of the poor people and barriers to access. Mechanisms must be found to gather their views and experiences as one of the foundations for developing and assessing policy. In new of the above, the following study was conducted to assess the perceived costs vis-a-vis benefits received among beneficiaries of the ESI Scheme.

STUDY SETTING AND DESIGN

A random cross sectional survey was carried out among patients visiting the ESI Dispensaries, which are the primary care providers in ESIS. Study was carried out by conducting interviews with people with the help of a semi-structured questionnaire containing open-ended questions as well as closed ended questions along with questions intended to elicit socio-economic data of respondents. Prior verbal consent was obtained from all participants in the survey. Undertaking was given that their identity will not be revealed in any form and information gathered in this interview will be used only for academic purposes. Every 3rd visitor was interviewed to eliminate interviewer bias. A total of 180 patients/visitors were interviewed.

Questions were asked to elicit information on the following factors

  • Contribution vs. salary
  • Determinants of utilization of the ESIS in its present form.
  • Use of private healthcare facilities and reasons thereof
  • Out-of-pocket expenditure for private healthcare

Are beneficiaries getting value for money in terms of cost incurred?

These include:

  • Contribution
  • Transport costs
  • Loss of wages cost
  • Time cost
  • Inconvenience faced while receiving services.

OBSERVATIONS

It was observed that among patients visiting ESI Dispensaries, majority fell into the lowest 1/3rd income group i.e. 61.67%. The middle-income group comprises of21.6% beneficiaries, whereas 16.67% fall into the high-income category. The average contribution (Health insurance premium) was found to be Rs 63.50 per month. Average number of beneficiaries per family unit was found to be 4.16, the median distance from home to healthcare facility (HCF) was 5.77 km, and the average time spent per visit to the healthcare facility was 4.33 hours. All respondents were aware of contribution being made but only 70% were aware of the actual amount of contribution.

It is seen that 71.6% of respondents do not use ESI-HCF for routine health problems but prefer to consult private practitioners for the same and spend an average ofRs 86.39 per visit to the private HCF. However for emergency problems and (perceived to be) major illnesses, 81.67% avail ESI-HCF. The majority of respondents (directly and indirectly) cite the deduction of contribution and availability of HCF as their primary reason for seeking healthcare in ESI-HCF. Quality does not seem to high on the list of reasons as only 16.6% respondents cite good quality HCF as their primary reason to avail ESI-HCF. An overall satisfaction rate is however found to be 63.34% and the major reason cited is the availability of all HCF under one roof, with no additional expense associated with it. However reasons for dissatisfaction (23.4% of respondents) and non-use of ESI-HCF is cited to be too much time spent per visit, a large number of lengthy queues and shortage of staff Majority of beneficiaries want procedures in place to reduce time spent per visit by streamlining processes so as to decrease queue numbers and queue lengths, by increasing counters and increasing staff However, if given an option to leave ESI, only 15% would like to leave and 85% would prefer to stay. On being asked their opinion of extension of ESIS to general public on the same criteria, 78.3 % thought this to be a good option, whereas 13.3% did not want it to be so, opining loss of exclusivity for ESI beneficiaries and overburdening of the existing system in such a situation As far as perception of cost (direct and indirect) versus benefits is concerned, 55% beneficiaries perceive the benefit to be more than the cost, 26.7% perceive cost to be equal to benefits and only 18.3% perceive cost to be more than benefits.

An analysis of the factors of the individuals, who perceived costs to be more than benefits, showed that these were individuals who gave a choice to leave ESI if so given an option. Majority of individuals traveled a distance more than the median distance found in this study, spent more than average money per visit to HCF, majority belonged to the upper income group and the level of overall dissatisfaction was higher in this group.

DISCUSSION AND ANALYSIS

As seen, the lowest socio-economic strata of the beneficiaries maximally seek healthcare in the ESI-HCF. This finding is reported by other low-income countries as well, where insured patients are more likely to use outpatient facilities, and public providers, an effect that is particularly strong at lower income levels.(8) Despite this fact, the beneficiaries do not prefer to seek healthcare trom the ESI-HCF in event of minor illnesses, although the direct cost (average monthly contribution) appears to be less than the average cost in seeking private healthcare for a single isolated event. It may also be due to the probably due to the presumption of minor illnesses being an isolated event & perception of a large number of indirect costs such as loss of wages, time wastage and inconvenience, associated with the event, which makes this option economically unattractive. Therefore, it is obvious that people are aware of the costs to them (both directly and indirectly) vis-a-vis the benefits they receive. The World Health Report 2000, Health Systems :Improving Performance(1), also concurs that people are aware of their contributions in a social health insurance system, which allows them to make such decisions. This finding is also consistent with the findings of the National Health Policy 2002. In fact, most developing countries in the South East Asian region have Out-Of-Pocket expenditure that is more than 50% of the Total Health Expenditure.(12) In this respect, the health seeking behaviour of ESIS beneficiaries is similar to the overall health seeking behaviour of the people in India in general. However, in major illnesses and emergencies, ESI-HCF is the preferred HCF of majority of respondents, possibly due to the expectation of major associated expenses. Similar results have been reported by another study in Thailand.(7) It appears that the major reason for seeking healthcare trom ESI-HCF is economic consideration in one way or another. The overall satisfaction rate with ESI-HCF is 63.3%, which is better than other studies. In a study carried out in Palestine, only 33% of households were satisfied with the services available under the insurance scheme.(13) The reason for satisfaction is also economics i.e. availability of health care including expensive medication under one roof and avoidance of extra expenses. Quality does not seem to be a high consideration for satisfaction. The dissatisfiers are factors which are viewed as costs paid for receiving benefits, the major one being perception of too much time consumed per visit to ESI-HCF, whether it be manifested in travel time or waiting in too many and long queues. This paradoxical situation of being satisfied but not perceiving the quality to be good is explained by the fact that they are satisfied by the economic benefits they get but are dissatisfied by long queues and long waiting time. Most ESI beneficiaries have suggested measures to streamline processes in such a way so as to decrease waiting time and serving time i.e. a reduction in turnaround time and delays which may be possible with business process re-engineering. This is consistent with suggestions given by DFID, that the most promising method suggested to improve quality of services through financing mechanisms is not through raising more funds, but through organisational reforms necessary to implement them.

Table-2: Cost-Benefit analysis of various factors

S.No Factors Analysed Range (where applicable) Average
1 Total no. of respondents 180 P 76.67%
F 24.3%
2 Number of beneficiaries per family 1-8 4.16
3 Distance of residence from
HCF
1-50 Km 5.77 Km (median)
4 Money spent in traveling
to HCF per visit
  Rs 23.7
5 Time spent per visit
to ESI- HCF
  4.33 hr
6 Salary per month Up to Rs 3500
Rs3,500 – 5000
Rs 5,000-7000
61.67%
21.6%
16.67%
7 Contribution (monthly)
a. Respondents aware of amount of contribution
b. Unaware of amount of contribution
Rs 63.50 70 %
30%
8 HCF availed in routine health problems   ESI-HCF 28.33%
Private HCF 71.6%
9 HCF availed in emergency
& major health problems
  ESI-HCF 81.67%
Private HCF 18.33%
10 Expenditure per visit to Private HCF Rs 20-250 Rs 86.39
11 Reasons for seeking treatment in ESI-HCF
  • Deduction of contribution
  • Major health problem
  • To save money
  • Good HCF
  • Other reasons
 

38.1%
13.
32.

16.%
1%
12 Satisfaction with ESI-HCF
  • Yes
  • No
  • Somewhat
 
65.
24.

11.%
13 Reasons for satisfaction with ESI-RCF
  • Everything available
    including expensive medication
  • Saves money
  • Good doctors
  • No particular reason
 

75.%

12.%
5 %
8 %
14 Reasons for dissatisfaction with ESI-HCF
  • Too much time
  • Too many queue numbers & long queues
  • Shortage of staff
  • Too much rush
  • Treatment not good
  36. %
39.
11.

7.
7.
15 Measures that ESI
should take to improve services
  • Decrease queues and queue lengths
  • Reduce time wastage
  • Increase staff
  • Increase counters
  • Streamline processes
  • No suggestions
 


22%
10%
17%
8%
5%
38%
16 If given an option to leave ESIS,
what would be preferred
 
  • Stay with ESIS 85 %
  • Opt out of ESIS 15 %
17 If opting out of ESIS,
what HCF would be preferred
 
  • Private HCF 78.%
  • Govt hospitals 22.%
18 Should ESIS be extended to the
general public on same criteria?
 
  • Yes 79.%
  • No 13.%
  • No opinion 8 %
19 Perception of costs vs benefits  
  • Benefit> cost 55%
  • Benefit = cost 27.%
  • Benefit < cost 18.%

Despite perception of costs, an overwhelming majority of beneficiaries (85%) do not opt for leaving ESIS, also probably due to economic reasons, as the ESIS is perceived as an umbrella providing protection against expenses associated with major illness. As far as perception of cost vs. benefits is concerned, a similar number view benefits as being equal to or more than costs incurred.

CONCLUSION

Social health insurance is a pro-poor healthcare financing option and is well understood by those currently its beneficiaries. This scheme provides an economic shield and enables beneficiaries to avail protection against economic risk associated with major illness/ emergencies. Very few would actually like to exit the system, thus proving that perception of benefits accrued outweigh the perceived costs incurred by the beneficiaries. With a vast medical infrastructure in the country, better than average healthcare indices, and a favourable benefit-perception amongst its beneficiaries, this scheme has the potential to be extended to general public, but with inputs in place like capacity building, business process reengineering and removal of barriers to access. This experience can be used as a launching pad for extending this scheme or designing new ones for general public, by building upon strengths and improving upon the weaknesses recognised by undertaking further studies on this scheme and similar health insurance schemes operational in our country.

REFERENCES

  1. World Health Report 2000, Health Systems Improving Performance
  2. Mwabu Germano, User Charges for Health Care: A Review of the Underlying Theory and Assumptions, United Nations University, World Institute of Development Economics Research- Paper 127, Helsinki, (1997)
  3. DFID Health Systems Resource Centre2001, Workshop for Strategies in Health Financing in India, Bureau of Planning MOHFW, Govt of India & WHO Jan 2004
  4. Benedict Irvine, David G Green, Social insurance-the right way forward for health care in the United Kingdom? BMJ 2002;325:488-490 (31 August))
  5. Normand C, Busse R,; Social health insurance Financing in Funding Healthcare: Options for Europe. Buckingham; Open University press 2002)
  6. Health Insurance and Health Service Utilization in the West Bank and Gaza Strip, February 1998)
  7. Sirisinsuk Y, Fungladda W, Sighasivanon P, Kaewkungwal J, Ratanawijitrasin S; Health seeking behavior among insured persons under the Social Security Act, 1990; Southeast Asian J Trop Med Public Health. 2003 Sep; 34(3): 662-9
  8. Jowett M , Deolalikar A , Martinsson P, Health insurance and treatment seeking behavior: evidence from a lowincome country; Health economics; January 2004)
  9. Margus L, A policy of introducing a new contract and funding system of general practice in Estonia The International Journal of Health Planning and Management Volume 17, Issue 1, Pages 41- 53
  10. Annual Report ESIC, 2001-2002
  11. Mossialos E, Citizens and Health Systems; Results from a Eurobarometer Survey, Brussels European Commission Directorate General for Health & Consumer protection 1998
  12. World Health Report 2002, Reducing Risks, Promoting Healthy Life, Annex Table 2, WHO
  13. Working paper; Health, Development, Information and Policy Institute, Ramallah, Palestine).

S. Bedi, S.K. Arya, D.K. Sharma, R.K. Sarma

1 Chief Medical Officer, ESI Corporation, New Delhi

2 Associate Prof, Department of Hospital Administration, AIIMS, New Delhi

3 Medical Superintendent, AIIMS, New Delhi

4 Director, NEIGRIHMS, Shillong

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