Regulatory support needed to expand reach of health insurance

Posted online: Tuesday, Jun 24, 2014 at 0000 hrs
In the wake of a new, stable government at the Centre, we hope for an impetus towards a higher growth trajectory as far as the health insurance sector is concerned. The need of the hour is to make health insurance more accessible and affordable for all. While health insurance is the second largest contributor to the non-life insurance business in India, its penetration still remains a challenge. ‘Out-of-pocket’ expenditure on healthcare continues to contribute to widespread poverty in India. According to World Bank data, 8 crore people are pushed below the poverty line every year due to high medical expenses.

Medical inflation is rising fast in the light of rapid technological development and innovation in the medical space. As a responsible corporate citizen, our endeavour would be to make healthcare affordable for all. Health insurance is perhaps the best answer to high medical expenses and we have to work towards extending it across the country.

From the government, we seek support on the regulation front to provide the much-needed thrust to our initiatives. Firstly, there must be an increase in the tax exemption limit under Section 80D from R15,000 to R25,000 for individuals and an additional R25,000 for parents (R30,000 for parents who are senior citizens). This is very important to motivate Indians to choose the right sum insured. Families would have the much-needed financial means to check on their current health status and provide them with the ability to take timely precautionary measures. This will be a step towards enabling healthy living for all Indians.

Secondly, we welcomed the step of the previous government to bring in OPD and preventive health checks under the ambit of Section 80D of The Income Tax Act. We would request the new government to encourage people more with added tax incentives.

The current tax rebate of R5,000 available for preventive checkups is within the health insurance exemption limit under Section 80D of IT Act. We recommend to increase the limit to a minimum of R10,000 and make it additional to the rebate one gets for the health insurance premium paid. Timely diagnosis of ailments would work a long way to prevent people from having a financial burden due to critical illnesses and hospitalisation.

Thirdly, people are subjected to service tax when buying a health cover. We would request that this be looked into and the taxation is removed as health insurance penetration needs to increase substantially and quickly. This would surely make health insurance more affordable for the people of India.

Fourthly, health insurance awareness is one of the key problems in increasing penetration across the country. The government may wish to build a budget for marketing programmes, which would enhance the need for Indians to get covered under health plans. This initiative found immense favour last year with Irda and the insurance council with support from all the insurance companies.

A budgetary allocation this year would make it far more effective and efficient.

Lastly, we are looking forward to the long-pending Insurance Laws (Amendment) Bill, 2008, this year, enabling an increase in foreign direct investment (FDI) in Indian insurance companies from the current ceiling of 26%. Opening up the insurance sector for FDI investment will enhance the inflow of expertise from international insurance companies in terms of processes and data analyses.

Antony Jacob is chief executive officer, Apollo Munich Health Insurance