Health Financing Can Help the Migrant Workers Caught in Coronavirus Crisis

The migrant workers have been affected the most as the economic activities came to a halt after the lockdown imposed across the country to control the spread of coronavirus. However, the relief measures announced by Finance Minister Nirmala Sitharaman are steps taken in the right direction to improve the condition of workers in informal sector and the urban poor.

Centre for Monitoring Indian Economy (CMIE) estimates that over 122 million people in India lost their jobs in April alone and around 75% of them were small traders (MSME) and daily wage-labourers. Historically, weak labour laws preclude transparency and accountability towards workers in the informal sector causing under-reporting of employment figures.

The recent relief measures from the government and proposed changes to law show that policy attention has begun to shift. The new policies exclude migrant workers from welfare schemes in terms of food, housing and employment security. There is now an urgent need for a shift in policy focus from universalisation of minimum wages to Universal Health Coverage and institutional capacity towards health security schemes. Without swift and decisive action to address the crisis, socio-economic and health access inequity is bound to rise.

Migrant workers comprise a large part of the informal sector which employs close to 93% of workers in India and contributes nearly 50% of economic output. They lack safe working and living conditions, face forced labour, gender-based discrimination and barely subsist on average Rs 500 a day. Ninety per cent of health expenditure is out of pocket (OopE). This has severe long-term consequences for health and earnings. For perspective, less than 20 million informal sector workers are registered under employee state insurance schemes.

It becomes essential to expand coverage of social health insurance schemes to informal sector workers. Coverage mechanisms should be devised with attractive bundled offerings and benefit packages using targeted pull marketing strategies. Strong compliance measures and portability of schemes is crucial as is support from the larger network of public and private health facilities with adequate availability of health diagnostics and drugs, amongst others.

For example, Thailand’s Universal Coverage Scheme was able to significantly improve compliance and bring own OoPE

to 12%. One Nation One Ration Card can serve as a platform for health benefit registrations and portability.

Alternative financing solutions can effectively complement health insurance schemes. Government national mission on financial inclusion and digital payments are promising alternatives in health savings account, working capital facilities with inbuilt insurance coverage and health loan accounts for vulnerable communities. For instance, the credit access announced to street vendors, digital payment rewards can be linked to promote innovative health financing solutions that can improve access and affordability.

Achieving the goal of UHC also requires rethinking the role of the private sector. It has the ability to provide access to quality care at affordable costs in ways that go beyond replicating traditional health financing models. A new age of social entrepreneurs is responding to this challenge with bottom-up innovations, market-based solutions and sound business models achieving social impact. India is fast becoming a preferred destination for impact investing, an investment class that can significantly contribute towards its Sustainable Development Goals.

If nurtured as an asset class, it can assist the government to unlock new pools of capital and deploy financing tools that can drive efficiency in social schemes and unleash the power of social enterprise in India. India has the potential to be a global leader with low cost innovations that can serve not only it’s people but create solutions for nearly 3 billion underserved population in the world.

(Author is the Head of Impact Investments at IPE Global and USAID, Innovation in Financing Platform PAHAL)

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