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 labour market, accounting for more than 70 percent 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 programmes in Pakistan are also politically motivated. It has been observed that the expansion of available social security programmes was not evidence-based, which hindered programme sustainability. The purpose of this study is to analyze the feasibility of health card plus universality in Khyber Pakhtunkhwa and to assess the potential benefit of extending the social security package to informal workers.
Sehat Sahulat Card, a health insurance programme launched by the Government of KPK, to protect the people of KPK from economic shocks arising from health emergencies. The programme was launched in 2015 and was rebranded as Sehat Card Plus, in 2021, to reflect the universality of its coverage for the people of KPK. The programme follows the partner-agent model, where the government of KPK pays an annual premium to State Life Insurance Corporation (SLIC) on behalf of beneficiaries.
The government should promote 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 sector. It should reduce 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 labour mobility by providing a common platform for networking and protection between the formal and informal sectors
Transitioning the programme from a project mode to a permanent universal health insurance programme sounds like a success story in the health sector and a major achievement for the government, but at what cost? The programme 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 programme’s sustainability, as it was seen that the caretaker government stopped funding the programme for several months, saying that the government could no longer afford the programme.
In each phase of the programme, programme costs increased with increasing population coverage. In the first phase, the programme cost about Rs 1.4 billion annually, with the KPK government paying only 12 percent from 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 programme costing around Rs 5.4 billion annually, targeting 1.8 million households, was fully funded by the KPK government. The programme’s current expenditure appears to be problematic, reaching Rs 30 billion per year (according to administrative figures), covering the entire population.
The question remains, was the programme evidence-based? The answer is no. Along with financial problems, the programme is also performing poorly on many indicators in different districts. According to a third-party evaluation report, 80 percent of SCP users in KPK believe that it is difficult for them to meet inpatient expenses. Additionally, 78.5 percent 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 programmes for different socio-economic classes. Only eight percent of the wealthiest SCP users reported having health expenditures below 10 percent of total income, compared to 19 percent of the poorest SCP users.
Furthermore, KPK has only 123 hospitals with SLIC on panel, covering the health of a population of around five million. The low number of hospitals further affects the effectiveness and reach of the programme. The government pays a Rs 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 have only 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 Buner, Dera Ismail Khan, Lakki Marwat, Upper Dir and Haripur. Furthermore, Shangla, Kohat and Mansehra have a combined population of around three million, with three hospitals in each district, making nine hospitals to cover a population of three million. Instead of addressing the current challenges in the programme, the government moved towards universalization of the programme when there is not a single study that recommends such a step, but vote bank and political objectives do, endangering the sustainability of the programme.
The data showed that programme expansion was not truly rational or evidence-based. Such politically motivated programmes 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 labour productivity. It should promote 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 sector. It should reduce 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 labour mobility by providing a common platform for networking and protection between the formal and informal sectors.
