For the low-income people, insurance was never considered to be an option in the past. They were assumed to be too poor to save and pay premium. Hence, the government assumed the responsibility of meeting health care needs of the poor. One could argue that if government pays for the poor anyway, why think of insurance at all? Instead, why does government not continue providing free health services to the poor, as in the past? Well, the strategy of free public health provision has not worked well in most states. Shrinking budgetary support to the public health services, inefficiency in provision, and unacceptably low quality of these services is reflective of this..

 First, it is being increasingly realized that even low-income people can make small periodic contributions, which can add up to a significant amount, thereby taking some financial burden off from the already strained state revenues. Second, the insured individuals would have an option of going to either public or private service provider, which in turn would generate competition among providers for better services. Finally, health insurance can be used to promote certain desirable behavior. For example, the Aarogya Raksha scheme of Andhra Pradesh links family planning to health insurance.

Conceptually, a society can be thought of as consisting of two groups of individuals, those who can afford to buy health insurance that promises certain “minimum” level of benefit, and those who cannot afford to buy the “minimum” benefit on their own and need some public subsidy. As mentioned above, development of private health insurance may take care of those who can afford to buy insurance. For those who cannot afford, alternate approaches with some public subsidy are suggested. However, while operationalizing the idea, this conceptual distinction gets blurred. Government’s attention gets confined only to those who are below the poverty line. While those below the poverty line definitely need to be covered with government support, the non-BPL population with low-income also need to be covered, with or  without government support, since market insurance is likely to bypass this section as well. An important policy question here is: how best to target and reach out to  this section of the population? One way is to redefine the BPL population so as to include low-income people as well. Another approach is to include non-BPL population also in the scheme meant for BPL population with lower level of subsidy.

For the upper and the middle income people social insurance and voluntary insurance are

suggested to be the two dominant forms of financing health care. State’s role is primarily to develop an appropriate legislative framework, to appoint independent regulator, and to formulate procedures and regulations to avoid well-documented market failures (Misra et al. 2003).

Lets discuss below how many options are available today with government and non government sectors riding the with recent changes and initiatives for the unorganized sector:

1) ATAL PENSION YOGNA (Pension Scheme)

WHAT IT OFFERS: Pension between Rs 1,000 and Rs 5,000 a month.

WHAT IT COSTS: For a monthly pension of Rs 1,000, a 40-year-old subscriber will have to invest Rs 291 per month for 20 years, while an 18-year-old will have to contribute Rs 42 per month for 40 years.

WHO IS ELIGIBLE: All individuals between 18 and 40, who will have to contribute till they turn 60.

WHO SHOULD OPT FOR IT: This is an investment you need to make on behalf of your domestic staff who may not have anyone to look after them once they stop working.

2) PRADHAN MANTRI SURAKSHA BIMA YOJANA  (Accidental death benefit)

WHAT IT OFFERS: Accidental death and disability cover of Rs 2 lakh.

WHAT IT COSTS: Premium is Rs 12 per year.

WHO IS ELIGIBLE: Anybody who has a savings account in the banks that offer this scheme.

WHO SHOULD OPT FOR IT: Although it is for everybody, this scheme especially suits drivers, security guards, newspaper vendors, vegetable vendors and others who are exposed to the risk of accidental death or disability.

3) PRADHAN MANTRI JEEVAN JYOTI BIMA YOJANA (Insurance protection)

WHAT IT OFFERS: A pure protection term insurance cover which pays Rs 2 lakh to dependents in the event of the policyholder’s death.

WHAT IT COSTS: Premium is Rs 330 a year.

WHO IS ELIGIBLE: Anybody in the age band of 18-70 years who has a savings account in a bank that offers this scheme.

WHO SHOULD OPT FOR IT: This is a must for any member of your staff who is the sole breadwinner in his or her family.

4) PRADHAN MANTRI JAN DHAN YOJANA 

WHAT IT OFFERS: A savings account with no minimum balance. The  ATM-cum-debit card comes with in-built accident and life covers of Rs 1 lakh and Rs 30,000 respectively.

WHAT IT COSTS: Nil

WHO IS ELIGIBLE: Anyone belonging to the economically weaker sections of society. As all future welfare and subsidy schemes are likely to be linked to it, it is a must for your staff.

WHO SHOULD OPT FOR IT: All those working in the unorganised sector. You can transfer salaries directly into the accounts of your domestic staff to inculcate a banking habit in them.

5) POST OFFICE TIME DEPOSITS AND BANK FDs

WHAT IT OFFERS: Time deposits with tenures of one to four years yield 8.4%, while five-year deposits will earn 8.5%. Bank fixed deposits in the name of your employees’ senior citizen parents will earn 9-9.25%.

WHAT IT COSTS: The minimum investment for post office time deposits is Rs 200 and there is no cap.

WHO IS ELIGIBLE: Anyone with a bank account or Aadhar card.

WHO SHOULD OPT FOR IT: These investments will help meshorter term requirements of your staff and other unorganised workers like housing loan down payment, coaching class fees and so on.

6) KISAN VIKAS PATRA (Investment option)

WHAT IT OFFERS: A secure interest rate of 8.7% and the promise to double the investment in 100 months.

WHAT IT COSTS: The minimum investment is Rs 1,000. No maximum limit.

WHO IS ELIGIBLE: All

WHO SHOULD OPT FOR IT: All domestic workers, vendors and neighbourhood workers to fund their medium term requirements.

7) SUKANYA SAMRIDDHI SCHEME (Girl child benefits)

WHAT IT OFFERS: Guaranteed annual returns of 9.2%.

WHAT IT COSTS: Minimum contribution is Rs 1,000 a year and the maximum is Rs 1.5 lakh.

WHO IS ELIGIBLE: Girl child below the age of 10.

WHO SHOULD OPT FOR IT: Most domestic workers tend to take their daughters out of school to help with household chores or to make way for their brothers, whose education is considered more important. This serves as an incentive to save for a daughter’s education and marriage.

8) RASHTRIYA SWASTHYA BIMA YOJANA  (RSBY)  (Health Insurance Scheme)

WHAT IT OFFERS: Cover for expenses incurred during hospitalisation due to illness or surgery.

WHAT IT COSTS: Rs 700-800 a year for a cover of Rs 50,000 for indivuduals aged between 18 and 40 years.

WHO IS ELIGIBLE: All

WHO SHOULD OPT FOR IT: Hospitalisation can wipe out the entire savings of those already at a financial disadvantage. Though not offered by the government, affordable policies are available from state-owned non-life insurers like New India Assurance and Oriental Insurance.

MICRO PENSION FOR THE POOR

From enabling the poor to invest amounts as low as Rs.50, to co-contributing in their investment and encouraging employers to gift a pension, IIMPS is leading the marginalised section of the society towards a better and more secure future. Know more about how this team is working with the government and other agencies to change the lives of millions of people.

“I too would like to employ someone to clean my car some day like I do for other people now,” says Gauri, a car cleaner with big dreams in her eyes. Gauri has been working as a house maid and a car cleaner along with her husband for 26 years now. She has a family to support and two kids who are now standing on their own feet.

“But I don’t want to be a burden on them. That is why I have enrolled for the Micro Pension scheme, so that I can live my old age with dignity. The money will be of a great help when my husband and I grow old,” she says.

Gauri is one of millions of marginalized workers in organized sectors who believed that facilities like pension was something only the privileged class could avail.

But thanks to Gautam Bharadwaj and his social enterprise Invest India Micro Pension Services Private Limited (IIMPS), the economically poor community can now be ensured a financially strong future.

Gauri, the car cleaner

“Having started as an idea to give a chance to the poor and marginalized working class to live a comfortable life, the company has benefited over one million people so far”

 “Generally, people have the mentality that marginalized people don’t save or do not find the need to save for the future. We wanted to check if that’s the case, so we did a survey to check the demand of a micro pension programme for the poor,” he says.

And, within four months they had 25,000 registrations for the micro pension scheme. Bhardwaj knew then and there that he had to make this idea work and engage more people. IIMPS enables marginalized people to save smaller amount.

IIMPS is bridging this gap by collaborating with state and central government, UTI AMC , SEWA, national/regional banks, microfinance institutions, employers, self help groups, NGOs, cooperatives, worker associations and unions.

The biggest issue arises when it comes to collecting the payment.

There was a need to implement a simple, safe and trustworthy platform where the poor could easily deposit their money. To solve this issue, IIMPS implemented payment by card.

The client is given a prepaid card, which is mapped to his or her pension account. They can go any time to a designated shop, pay the amount they want to put in the pension account by cash, and the shopkeeper would swipe the card with the same amount. The user will get a message instantly. And hence the card is mapped to their insurance account; there will be no chance of theft or misuse of the money.

Pension, which was considered as a thing for elite, can now be enjoyed by poor as well.Gift a Pension: An interesting initiative by IIMPS[1] enables the poor to get pensions. The initiative enables employers to open a pension account for their domestic helps, drivers, gardeners, etc.

Gift a Pension scheme requires employers to help their house helps open a pension account. Gift a Pension scheme requires employers to help their domestic helpers open a pension account.

To extend help to people with very low income, who can barely manage to invest any substantial amount of money, IIMPS has been associated with the government’s Vishwakarma Micro Pension Scheme in Rajasthan where they are co-contributing the pensions. For every Rs.1,000 a client invests, the government adds another Rs.1,000 to it.

With all these solutions in place, IIMPS’ clients are more persistent and regular in paying the installments as compared to the government schemes. IIMPS has 40 to 45 percent persistency rate as compared to the government’s NPS, which has 15 to 17 percent.

The card system of investing has built trust and confidence among people.

The amazing micro pension scheme has enabled hundreds of thousands of marginalized people to secure a safer and financially strong future. You can also help by gifting a pension to your helpers today.

–  Ity Bhatnagar- Research Desk

Dilzer Consultants Pvt Ltd

References

Bhat, R. and E. B. Reuben (2002). Management of Claims and Reimbursements: The Case of Mediclaim Insurance Policy, Vikalpa, Vol. 27, No. 4, October-December.

Chollet, D. and M. Lewis (1997). Private Insurance: Principles and Practice, in George J. Schieber edited “Innovations in Health Care Financing: Proceedings of a World Bank Conference”, March 10-11, 1997, World Bank Discussion Paper No. 365, The World Bank, Washington D.C.

Ferreiro, A. Private Health Insurance in India: Would its Implementation Affect the Poor? Private Health Insurance and Public Health Goals in India, Report on a National Seminar, the World Bank, May 2000.

Garg, C. Implications of Current Experiences of Health Insurance in India, Private Health Insurance and Public Health Goals in India, Report on a National Seminar, the World Bank, May 2000.

Government of India (2002).Health Insurance—Issues and Challenges, Report of the Sub-Group, Ministry of Finance, Delhi.

Gumber, A. (1997). Burden of Disease and Cost of Ill Health in India: Setting Priorities for Health Interventions During Ninth Plan, Margin, Vol. 29(2), pp. 133-172.

Gumber, A. and V. Kulkarni. (2001). Paper presented in the National Consultation on Health Security in India Organised by Institute for Human Development and UNDP with support from Ministry of Health and Family Welfare, Government of India, July 26-27, 2001.

Mahal, A. Private Entry into Health Insurance in India: An Assessment, Private Health Insurance and Public Health Goals in India, Report on a National Seminar, the World Bank, May 2000.

Misra, R. et al. (2003). Changing the Indian Health System: Current Issues, Future Directions, Oxford University Press, New Delhi, forthcoming.

Naylor, D. C. et al. (1999) . A Fine Balance: Some Options for Private and Public Health Care in Urban India, The World Bank, Washington, D.C.

Peters, D. et al. [a] Introduction, Private Health Insurance and Public Health Goals in India, Report on a National Seminar, the World Bank, May 2000.

Peters, D. et al. [b] Conclusions, Private Health Insurance and Public Health Goals in India, Report on a National Seminar, the World Bank, May 2000.

[1]http://www.micropensions.com/