2018 Budget Expectations – NATHEALTH recommends introduction of Mandatory Health Insurance

NATHEALTH Budget Expectations

Mandatory Health Insurance, Insurance Coverage for Elderly, Priority Sector Status, Creation of Health Infrastructure and Innovation funds, Promotion of Medical Tourism, CSR Incentives along with other tax related reliefs and exemptions prominently figures in the pre-budget recommendations submitted to the Government by Healthcare Federation of India (NATHEALTH).

To ensure universal healthcare access and augment healthcare and infrastructure capacity, NATHEALTH has emphasised on introduction of mandatory health insurance. Currently, only around 4% of the population in the country have health insurance coverage. Out of pocket healthcare spending constitutes 86% of total healthcare spends in India. Further, a vast majority of the rural poor are unable to access quality healthcare.

“The major reason for the low penetration of health insurance is that it is currently optional. It is also the case that most of the people opting for health insurance have some pre-existing illnesses. This has led to a high claims ratio being prevalent in the health insurance business which makes it difficult for health insurers to sustain their operations,” said Dr. Arvind Lal, President, NATHEALTH.

While appreciating the government’s efforts to introduce a health insurance scheme for economically weaker sections of the society and senior citizens in the last budget, NATHEALTH recommended that the government could also explore making health insurance coverage mandatory for all citizens in a phased manner, initially covering the organised sector.

“Apart from enabling universal access to healthcare, this move would also meet the urgent need for augmenting healthcare capacity creation in the country,” Dr Lal added.

NATHEALTH also recommended increase in quantum of deduction towards payment of medical insurance premium as it considers the present annual deduction limit of Rs 15,000 inadequate to push health insurance schemes. Accordingly, it should be enhanced to Rs 50,000 for self and family and the current annual limit of Rs 20,000 in respect of dependent parents needs to be enhanced to Rs 50,000.

The Federation also emphasised that there is an urgent need for setting up a Health Infrastructure Fund and A Medical Innovation Fund.

“The Government can think of providing the seed capital for funds such as Health Infrastructure Fund and Medical Innovation Fund. Access to funding by creating a specific fund for healthcare infrastructure and innovation would facilitate access to capital for the sector,” said Mr Anjan Bose, Secretary General, NATHEALTH.

“These funds would encourage entrepreneurship and newer business models which are the need of the hour for improving access, availability and quality, especially in Tier 2, Tier 3 and rural areas,” Mr. Bose added.

NATHEALTH also recommends that healthcare should be given priority sector status. Though healthcare was included in the harmonized master list of infrastructure sub sectors by the Reserve Bank of India in 2012, long term financing options are still not available for healthcare providers.

According to NATHEALTH, “Priority Sector” status to healthcare will help in the process of enabling development of innovative long term financing structures for healthcare providers apart from creating an attractive environment for domestic production of medical equipment, devices and consumables while also catalysing research and development. NATHEALTH feels that this will channelize funds from the banking sector to create necessary healthcare infrastructure and meet societal objectives of the Government of India.

In order to make India a preferred healthcare tourism destination by ensuring a level playing field with other Asian healthcare nations, and earn valuable foreign exchange, NATHEALTH also suggested that earnings from Medical Tourism should be made fully exempt from income tax for healthcare providers.

Other Recommendations from NATHEALTH:

  • Need for extending the 150% weighted deduction scheme under section 35AD of the Income Tax Act, 1961 for another 5 years up-to 2022
  • Provide import duty relief in respect of lifesaving equipment, not manufactured in India and enable a robust regulatory framework for domestically manufactured medical devices.
  • Further simplification of the tax regime in respect of Real Estate Investment Trusts (REITs)/Business Trust
  • Need for a liberalised FDI regime in respect of investments relating to medical education
  • Exempting the healthcare sector from the Minimum Alternate Tax (MAT) regime under the Income Tax Act
  • Lowering of Corporate Tax rates as announced in the Union Budget 2014-15
  • Abolishment of Dividend Distribution
  • Need for revision in the Service Exports from India Scheme (SEIS) Reward Rate
  • Extension of duration of the Tax Holiday scheme from 5 years to 10 years for new hospitals to ensure viability
  • Enhancement in medical reimbursement exemption limit for salaried employees to Rs 1 lakh per annum in line with cost inflation index
  • Introduction of a separate deduction in respect of preventive health checks
  • Introduction of a deduction for investment into long term bonds with a minimum tenor of 10 years issued for setting up hospitals with at least 100 beds
  • Allow Corporate Social Responsibility (CSR) spends as tax deductible business expenditure

About NATHEALTH

NATHEALTH has been created with the Vision to “Be the credible and unified voice in improving access and quality of healthcare”. Leading Healthcare Service Providers, Medical Technology Providers (Devices & Equipment), Diagnostic Service Providers, Health Insurance companies, Health Education Institutions, Healthcare Publishers and other stakeholders have come together to build NATHEALTH as a common platform to power the next wave of progress in Indian Healthcare. NATHEALTH is an inclusive Institution that has representation of small & medium hospitals and nursing homes. NATHEALTH is committed to work on its Mission to encourage innovation, help bridge the skill and capacity gap, help shape policy & regulations and enable the environment to fund long term growth. NATHEALTH aims to help build a better and healthier future for both rural and urban India. http://www.nathealthindia.org/

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