Continuation of the 2-part commentary about Employers, Employees and Workplace Benefits for Healthcare, that have now become a center-stage conversation for all #CompaniesThatCare
…Do Indian Employers care? I think they do. They just don’t know what are their options. Options, that achieve the following 3 things:
1. Keep their employees happy.
2. Keep their CFO happy.
3. Keep their lives easy (well, at least in their role as an HR manager responsible for implementing employee health programs).
Let’s take a closer look at each of the Employee Health Benefits programs implemented in India at the moment. Are these group insurance policies comprehensive? Do they have adequate coverage for the employees to at least fund illnesses or severe health conditions?
The Employee State Insurance Scheme or ESIS is India’s most expensive and magnanimous health insurance scheme. It covers 13 Crore (130 Million) people, with an ‘in-cash’ support of Rs. 80,000 Crore (a little over a Billion Dollars). Under this scheme, Employers with over 10 employees make an obligatory 4% deduction on an employee’s payroll (those employees with a monthly income of more than Rs 21,000 (a little less than $300 per month).
Despite insuring nearly 10% of India’s population under this scheme, a research paper by ‘Dvara Research’ reports high dissatisfaction among beneficiaries. If you are an Indian, think back to anyone you know who availed a benefit under this scheme and if they did, ask them how it was.
If you think the constraint is resources, you could not be more wrong. The ‘Employee State Insurance Corporation’ or ‘ESIC’ records annual profits of Rs. 10,000 Crores (about $150 Million) each year, and its un-expended reserves (money not disbursed) are deeper than the entire extent of India’s healthcare budgetary allocation. Read that again. This in a country, that had an ‘Out of Pocket Expenditure’ or ‘OoPE’, on healthcare of over $45 Billion in a year.
Over the years, while the ESIS memberships have increased substantially (enforcement etc.), it has lead to an increase in the ESIC’s revenues, but since the scheme does not expand its services further to its beneficiaries (“Insurance Claims Friction” as I call it), it accrues huge profits to the entity that manages this program. Would it surprise you to know that the ESIC garnered an excess of over 40% of its overall income every year in the last decade?
#2 Corporate Health & Wellness programs
A mere 15% of India’s workforce, or about 75 million employees, are covered under a corporate ‘Health and Wellness’ program. These programs typically provide tele-medicine facilities, health insurance, health checkups, access to the gym, pharmacy, etc., and the occasional “health talk” or the Zumba class.
HR Teams have found themselves blind-sided by the pandemic and have done everything they possibly can for their employees. The companies we work with at QubeHealth have worked night and day to get their employees tested and screened, arranged hospital beds, and plasma, and more recently arranged and paid for vaccinations for their employees — spending an average of $15 Per Employee for just the first jab.
But as discussed earlier, HR Teams of #CompaniesThatCare recognize that they need to have a more comprehensive employee healthcare program. Something that includes health insurance, but augments it with services that address an employee’s healthcare needs — for themselves and their families. After all, a better, more comprehensive health benefits plan means an edge over the competition when it comes to attracting talent.
#3 Companies Chart Out Conditional Coverage
The Global Wellbeing Report 2021 from AON indicates that while 87% of companies have instated a well-being initiative, a mere 55% have a well-being ‘strategy’. There is no one to “walk the talk,” starting from CXOs taking accountability for employee-well being to mapping yearly progress on the said initiatives that lead to better health outcomes.
Similarly, on paper, Group Health Policies (GHI) extend “comprehensive coverage”. However, in reality, these schemes are not adequate at all. On average, low to middle-grade employees are insured by an average small sum of Rs. 2 Lakhs (about $2700) and senior-level employees up to about Rs. 4–5 Lakhs (about $6000 to $7000).
These sums are decidedly insufficient to cover a family comprising the employee, their spouse, children, and sometimes parents. In addition, if an organization faces financial distress, insurance coverage can shrink further.
#4 Sub-Limits and Other Restrictions
Sub-limits are the caps laid down by health insurers for expenses on specific medical treatments or facilities, such as hospital room rent, ambulance charges, doctor consultation fees. And these caps in your employer’s cover significantly bring down your claim amount, increasing employees’ out-of-pocket expenditure during emergencies. When was the last time you read, what’s included and what’s not included in your health insurance policy?
These sub-limits often prevent employees from receiving 100% financial security on their medical requirements. But that’s not it! The employer’s cover also doesn’t finance various instances like accidental cases, domiciliary hospitalization, pre-planned procedures like a Cataract operation, or allot a limited portion of the claimable sum to deal with certain critical illnesses.
For instance, an employer-provided policy covering any four dependents can include child and spouse but exclude parents or pregnancy, and older dependents are more likely to require a separate health insurance cover; this limitation means you will pay the necessary expenses on your own and/or get additional insurance for each of your family members while saving money to pay for any future out-of-pocket expenditure on health.
Nearly 57% of employees covered by group personal accidents schemes and 53% of employees insured by group medical coverage deem these plans as inadequate.
#5 GHIs, Ridden With Loopholes!
Since these ‘group policies’ typically include umbrella covers, higher claims make them un-viable over the mid-to-long term. Besides, an increased number of claims can increase policyholder’s renewal premiums or lead to insurer’s withdrawal.
GHI schemes are especially vulnerable during the pandemic when the demand for insurance has grown due to the cost of medications and treatment and associated expenses of masks, PPE kits, post-hospitalization care, gloves, and oximeters. But the capacity to service these healthcare claims remains challenged.
Moreover, higher payouts can translate into the introduction of co-pay and other restrictions. Nearly 76% of employer-provided insurance schemes have room-rent and co-pay limiting clauses. And based on claim experience and the escalating demand for insurance premiums can shoot up sharply in the future, resulting in dissatisfaction amongst members who paid smaller premiums.
The tragedy continues with what the employers provide, which will only pay for 40–50% of what the employee pays. For instance, if a corporate insurance scheme limits the coverage at Rs. 4–5 lakhs, considering the costs of a ventilator, ICU hospitalization, and oxygen support today, the sum will only cover 20%-30% of expenses overall. Employees will pay for the rest from their pocket.
So what should employers do? What should employees do?
What Do Employees and Employers Want?
The employee health and benefits landscape is transforming. From an increased emphasis on comprehensive ‘Employee and/or Family Health Benefits’ programs to wellness programs to conversations around dealing with the pandemic pressure, Indian workplaces are changing.
59% of employees sought insurance for general consultation; however, only 39% received this in their current group plan. This means Indian Employees need to have someone to talk to — a Doctor, a Counselor when they need. Dedicated. In addition, 73% of female employees wanted maternity care insured, but only 28% of employers provided this as a group plans benefit.
A survey indicates that 92% of respondent employees favor voluntary benefit plans where employers should cover a more diverse range of medical risks. Employees are even willing to share premium costs and spend 1–5% of their annual salaries to tailor insurance plans as per needs. Besides, most employees will keenly invest in OPD expenses, top-ups, and parents’ insurance plans to reduce their out-of-pocket expenditure.
In parallel, 31% of organizations have plan enhancements in place to address women employees, 30% are acting on medical advancements, and 26% are focusing on long-term care needs and chronic conditions.
In essence, what the Employed Indian needs is a financial solution to their healthcare problem.
The Way Forward and Solutions
#1 ESIS schemes can insure the informal sector
The government can expand ESIS’s current beneficiary base to include all formal sector workers instead of only blue-collar workers and eventually cover informal sector employees. This way, ESIS can offer health insurance coverage to a significant proportion of our working population. It will also help ESIS turn into a self-sustaining model.
#2 Health Data to drive better Health Outcomes
Everyone talks about data, but very few know what to do with it. There is a hoopla around healthcare in India, but loads of unstructured healthcare data can be used to derive better health insights and outcomes for employees. Employers can turn to AI-modeled platforms to design and deliver better preventive care, mental wellbeing and other health plans, while augmenting this with value-added wellness services in tune with employee’s medical requirements.
In the post-pandemic era, organizations can benefit from cultivating a culture of wellness backed by data-rich platforms and healthcare analytics to boost employee engagement and productivity. With employee health-centric initiatives in place, organizations can stay prepared for potential situations impacting their employees’ health, safety, and ability to perform.
#3 Solve the Financial problem to address the Healthcare problem
Companies have begun keeping aside an ‘Employee Healthcare Corpus’, but this is not possible for all companies and this can’t be a comprehensive solution. Not to mention the administrative nightmare of deciding which employee gets to access these funds.
The question Employers need to be asking themselves is, “How can we ensure 100% coverage of our Employee’s Health Risk — for themselves and their families”. “How can we know about our Employee’s health, so we can help them better.” And “How can we simplify access to healthcare for our employees.”