Budget 2021: Healthcare for all is a necessary goal in India

Good health is paramount if one has to achieve any goal. For India to march towards its ambition of a 5-trillion economy, we need to broadly focus on three areas – jobs creation, training people to acquire the right skill sets and most importantly, ensure that people are productive from a health standpoint.

Healthcare for all is therefore an important and a necessary goal for the country. A demographic dividend can only be achieved if we have jobs, skills, and healthy people. However, India currently spends around 1% of GDP on healthcare, which is very less compared to other countries at a similar stage of development. The government needs to spend more on healthcare as it ultimately impacts the capacity and our ability to become a fast-developing economy.

Health insurance can be a great enabler to provide access to quality healthcare, not only for in-patient care but out-patient care as well. We need to put more concrete efforts to raise awareness about the benefits of health insurance and bring more people under its ambit. While COVID-19 has acted as a catalyst for health insurance, we need to sustain the momentum. The government can play an important role from a policy standpoint that nudges the people to buy health insurance.

People tend to neglect and delay the treatment of everyday illness which ultimately leads to them needing hospitalisation and requiring much more expensive care.

Currently, an unreasonably high 18% GST is levied on health insurance premium, which not only makes in-patient care unnecessarily expensive but is also a serious impediment in building out-patient products, which actually constitutes around 60-70% of healthcare spends. This creates a mismatch in availing healthcare services directly rather than going through insurance mechanism.

The government should consider lowering the prevailing GST rate on health insurance. This will not only enhance its penetration but also help government in collecting more tax by broadening the customer base.

In addition to reduction of GST slab, government can provide incentives and tax exemptions to companies and bring in regulations that encourage companies to opt for health insurance for their employees. Currently, health insurance premium paid by Corporate is treated as an expense and does not get input GST credit. While it has been temporarily allowed due to the ongoing coronavirus pandemic, government should consider making it a permanent feature to encourage MSMEs to offer health insurance to their employees. It will also benefit companies with large employee base as the spending on health coverage will further reduce.

Individuals currently can claim a deduction of up to Rs 25,000 when they purchase health insurance for their parents who are less than 60 years of age and Rs 50,000 if parents are over 60 years of age. The government can consider increasing this limit to allow a deduction of Rs 50,000 for parents less than 60 years of age and Rs 1 lakh for parents above 60 years of age. This tax benefit will encourage more people to opt for health insurance for their elderly parents. Such similar enhancements in tax benefits for expenditure on health insurance could be considered.

Further, it is important for the healthcare industry to be regulated and subjected to the same boundary conditions as health insurance for the sector to flourish and deliver affordability. When we look at the overall healthcare ecosystem, the absence of regulations in healthcare delivery impacts the interest of consumers. The government can really define and mandate policies and bring standardisation in the sector. We also need to focus on technology & digital adoption which can only happen through policy interventions.

Globally, India has become a lucrative market and it is our turn to be able to attract investments. Insurance is a well-regulated sector with robust consumer protection norms, hence attracting foreign capital would be more convenient. Allowing 74% FDI will propel the growth of health insurance sector, giving opportunities to more companies to invest in the country.

(The writer is MD & CEO, Max Bupa Health Insurance. Views expressed are personal)