With the Interim Budget round the corner, we are of the view that the government should make some significant changes in the health insurance segment to realize India’s ambition of ‘healthcare for all’.
While the Indian economy is showing tremendous growth potential, thanks to the government’s modern and inclusive outlook, it still struggles with a large population who do not have adequate access to healthcare. Even among emerging markets, India is one of the least insured countries with only 20% of people having any kind of health insurance. With the Interim Budget round the corner, we are of the view that the government should make some significant changes in the health insurance segment to realize India’s ambition of ‘healthcare for all’. Here’s our list of expectations from the budget:
Lower GST rate to 12% from 18% on health insurance premium
Currently, GST (goods & services tax) has been structured in a way that essential items have been placed in the lower GST bracket, whereas, high GST rates have been levied on luxury items. While there is no GST on fruits, vegetables, bread, etc., things like cheese, business class air-tickets, spectacles, etc. come under the 12% GST slab. Similarly, health insurance falls under the 18% GST slab.
With the constant rise in medical inflation and the instances of both communicable and non-communicable ailments, like cancer, heart issues, dengue, malaria, etc, it is very important for us to provide access to right healthcare to people. Here, health insurance can play a pivotal role. Therefore, the government should lower GST rates on health insurance policies from 18% to 12% to make it affordable for the common man.
Make OPD treatment more affordable
Outpatient department (OPD) expenses account for nearly 62%2 of all healthcare costs in India. Currently, 18% GST rate is applicable on products providing outpatient coverage, which increases the treatment cost. With the advent of medical technology, a large number of diseases can be treated under OPD. Therefore, the government should bring down GST rate on products providing outpatient coverage to 5% and make it convenient for people to seek medical treatment.
Increase income tax relief limit under Section 80D
Raising the tax exemption limit substantially will motivate individuals to increase the insurance coverage for themselves and their families. In a current scenario, an individual can save tax up to Rs 1 lakh under Section 80D by buying health insurance for self and family. However, it is essential to revise the tax relief limit at par with the medical inflation.
GST input credit should be allowed on corporate health Insurance policies
Factors like long working hours, stressful working schedules, unhealthy eating habits, are taking a toll on the health of the Indian workforce. For any company, employees are the real asset, and therefore, it is indispensable to ensure their well-being. The government should allow GST input credit to those companies who are offering group health insurance to their employees. It will encourage all employers to take health insurance for their employees and provide them with social /financial security. Also, employers/employees should be given a choice between group health insurance and ESI.
Collaborate and Educate
Unless we are able to control ill-health and the ensuing poverty of people caused by the huge costs of out-of-pocket medical treatments, we can’t really achieve economic growth. The government must join the insurance industry in educating all Indians. Big national level campaigns and events should be held by government associations to make people understand the value of health insurance and preventive care. The focus should be on monetary benefits to correct the existing mindset where it’s seen as a waste of money. The government should empower IRDAI to create insurance awareness and increase penetration.
Introduce tax exemption on travel insurance
Travelling has become the new craze among Indians. As per a recent survey, 38% of Indians prefer to spend their money on travel instead of spending it on shopping, food and other daily activities. Also, 25 million Indians traveled overseas in 2017.
Despite meticulous planning, a trip can go awry and can turn out to be a financial disaster. Whether it’s the accident or a sudden health issue, there are various factors which can spoil a trip. In the absence of adequate insurance coverage, it can turn out to be a nightmare. Therefore, it is essential to give tax concessions to encourage travelers to buy travel insurance cover.
Launch schemes akin to Ayushman Bharat
Ayushman Bharat is a fantastic government scheme that has successfully brought millions of Indians under the ambit of health insurance. While the government has achieved a huge milestone by launching the world’s largest health insurance scheme, still there is a long way to go. To make India health confident, the government should unveil more such health insurance schemes and expand the insurance coverage.
(By Antony Jacob, CEO, Apollo Munich Health Insurance)