The informal economy is an important aspect of every economy that exists in today’s globalized world. Furthermore, it is the single largest contributor to the Pakistan labor market, accounting for more than 70% of the total labour force, and is largely excluded from formal social security mechanisms. This exposes millions of workers to economic shocks, health emergencies, and lifecycle risks such as old age and disability. Article 22 of the Universal Declaration of Human Rights states, “Everyone, as a member of society, has the right to social security.”
However, the current framework in Pakistan focuses mainly on the formal sector, while the informal sector is largely ignored. Additionally, with poor targeting, social protection programs in Pakistan are also politically motivated. It has been observed that the expansion of available social security programs was not evidence-based, which hindered program sustainability. The purpose of this study is to analyze the feasibility of health card plus universality in Khyber Pakhtunkhwa (KPK) and to assess the potential benefit of extending the social security package to informal workers.
The Sehat Sahulat Card Service
Sehat Sahulat Card is a health insurance program launched by the government of KPK to protect the people of KPK from economic shocks arising from health emergencies. The program was launched in 2015 and was rebranded as Sehat Card Plus (SCP) in 2021 to reflect the universality of its coverage for the people of KPK. The program follows a partner-agent model, where the government of KPK pays an annual premium to the State Life Insurance Corporation (SLIC) on behalf of beneficiaries.
Transitioning the program from a project mode to a permanent universal health insurance program sounds like a success story in the health sector and a major achievement for the government, but at what cost? The program is currently facing sustainability challenges due to the current economic crisis and non-availability of financial resources. The political crisis is another threat to the program’s sustainability, as it was seen that the caretaker government stopped funding the program for several months, saying that the government could no longer afford the program.
In each phase of the program, program costs increased with increasing population coverage. In the first phase, the program cost about Rs 1.4 billion annually, with the KPK government paying only 12 percent of general tax revenue, while the bulk of the cost was borne by the German Development Bank (KfW), with a target of 0.10 million families. In the second phase, the program, costing around Rs 5.4 billion annually and targeting 1.8 million households, was fully funded by the KPK government. The program’s current expenditure appears to be problematic, reaching Rs 30 billion per year (according to administrative figures), covering the entire population.
How Effective Is the Program?
The question remains: was the program evidence-based? The answer is no. Along with financial problems, the program is also performing poorly on many indicators in different districts. According to a third-party evaluation report, 80% of SCP users in KPK believe that it is difficult for them to meet inpatient expenses. Additionally, 78.5% of SCP users saw the impact of health costs on their financial situation in the past year. Another very important aspect is the need for programs for different socio-economic classes. Only 8% of the wealthiest SCP users reported having health expenditures below 10% of total income, compared to 19% of the poorest SCP users.
Furthermore, KPK has only 123 hospitals with SLIC on the panel, covering the health of a population of around 5 million. The low number of hospitals further affects the effectiveness and reach of the program. The government pays a PKR 2,858.5 premium to SLIC on behalf of each citizen when most citizens do not have access to the services provided due to the unavailability of hospitals, while the upper middle class will not prioritize the quality of hospitals on the panel. Some districts even have one or two hospitals that provide services.
Bannu and Hangu with a combined population of 1.8 million have only two hospitals, one per district. There are two hospitals on each district panel at Bunir, DI Khan, Lakki Marwat, Upper Dir, and Haripur. Furthermore, Shangla, Kohat, and Mansehra have a combined population of around 3 million, with 3 hospitals in each district and 9 hospitals to cover a population of 3 million. Instead of prioritizing addressing the current challenges in the program, the government moved towards universalization of the program when there is not a single study that recommends such a step but the vote bank and political objectives, endangering the sustainability of the program.
The data showed that Sehat Card program expansion was not truly rational or evidence-based. Such politically motivated programs are a real threat to public welfare and tax dollars. The government is using the tax money for campaigning and political gain, giving false hope to the people instead of real welfare. Social protection should prioritize the needs of the poor and the poorest rather than expanding services to the already affluent that can meet their health, education, and other needs.
Instead of spending an additional Rs 25 billion annually on universal health insurance, the government should spend it on the welfare of the marginalized population by providing social security to informal sector workers and their families. This will lead to economic stability by reducing income insecurity, improving consumption patterns, and increasing labor productivity.
Social equity, by empowering marginalized populations such as women and youth and reducing the existing gap in rights and benefits between the formal and informal sectors. Reducing poverty by enabling households and families to access health care, education, and pension systems. This can also lead to the exchange of ideas and innovations while increasing labor mobility by providing a common platform for networking and protection between the formal and informal sectors.
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Khushal Khan is a student of MS Governance and Public Policy at the National University of Sciences and Technology (NUST), Islamabad. He can be contacted at [email protected]