Budget 2018News

Budget 2018 Expectations – Gautam Khanna, CEO, P. D. Hinduja Hospital & MRC

The takeaways from last year’s Budget have given a ray of hope for the Indian healthcare sector; that signs of support which were long overdue are finally becoming a reality. The government, in its 2017-18 Budget, increased  its spending on healthcare by 23% but we still have a long way to go. Public spending on healthcare should be increased to 3% of GDP. It is also crucial to increase spending on medical infrastructure, manpower and education to address the issues of access, affordablity and quality of services facing the industry today.

Expectations from the government are us under:


Reducing Financial Burden on Patients

India has one of the highest out-of-pocket expenditures on health globally. According to The World Bank, 89.2% of private expenditure on healthcare in India in 2014 was out of pocket, against the global benchmark of 45.5%.  According to an IRDA report, 43.75 crore people in India had health insurance in 2016-17, leaving more than 70% of the total population without a health insurance. To make healthcare more affordable, the Government should look at –

  1. Making health insurance mandatory. This would not only make healthcare more affordable for people, but also help improve the claims ratio for insurance companies, which would lead to their sustainability which in turn will lead to better coverage for patients.
  2. Implementing dedicated funding mechanisms like a Healthcare Savings Fund for salaried employees which is similar to EPF and which is tax deductible.
  3. The government should look into increasing tax exemptions for the common man to incentivise spends on health insurance. This could include increasing tax deduction limit for medical insurance premium for self and family to Rs. 50,000/- and an additional medical insurance premium of Rs. 50,000/ – for dependent parents

Focus on Preventive Healthcare

According to a WHO report published in 2017, Non Communicable Diseases (NCDs) contributed to around 5.82 million deaths or 61% of all deaths in India in 2015. Further there also has been an increase in life expectancy in the country.  Hence the government should encourage preventive healthcare practices and policies. Tax exemption on expenses for preventive health check-up should be in addition to the medical insurance premium and not a part of it, and the limit should be increased from Rs. 5,000/- to Rs. 25,000/- for self and family.

Bridging the Demand Supply Gap

Public Private Partnership

The Public Private Partnership (PPP) model is still a hugely untapped segment. The government should look into developing healthcare centres in the semi-urban and rural areas through way of this model and thus reach out to masses with affordable and quality healthcare

Medical Education

Foreign Direct Investment (FDI) and Public Private Partnership (PPP) should be encouraged in setting up of medical institutions so as to fulfil the high demand and quality medical professionals in the county.

Priority Sector Status

The healthcare sector should be given priority status which can help financing easy from banks. A conducive environment for innovation, domestic manufacturing should be encouraged so as to boost development in the sector.

Emphasis on Eradicating Infectious Diseases:

While NCD’s are the biggest causes of deaths in India, communicable diseases are also rising. The increase in the number of deaths owing to swine flu, chikungunya, TB, malaria should have us all worried. Government should focus in allotting higher funds on infectious disease and investments should be made to deploy technology in the field to set up a national surveillance for infectious diseases and epidemics. PPP in R&D should also be encouraged which will help in screening, treatment and prevention of infectious diseases

Lower Cost of Running Hospital Facilities:

With the input costs increasing, tax exemptions will help lower cost of running hospital facilities, thereby decreasing the financial burden on the patients.GST on hospitals should be made to ‘0%’, unlike the current scenario where it is exempt from GST (NIL), so that the input credit of GST paid can be availed. Government should reduce GST on all medical equipments, devices and input materials.. Budget should also address import duty relief including the GST levied for life saving medical equipment which are not manufactured in India and a relief on excise duty on equipment manufactured or assembled in the country.

New Ecosystems for R&D, Innovation & Technology:

Healthcare innovation should focus on frugal innovation and recombinant innovation like devices, workflow processes, care and business models. As more and more hospitals are adopting tech-based solutions, it is becoming imperative to have a standard framework and regulations for IT-based healthcare solutions, and the infrastructure. We look forward to the implementation of the National eHealth Authority (NeHA) which would boost the innovation and widespread adoption of healthcare technology. There should also be incentives for tech adoption and innovation. Similarly, there should be a regulatory framework for medical devices manufactured domestically. We also need to have more focused R&D strategy which should be aligned to national priorities. There is also a high need for investment in manpower required for R&D. Government should extend the scope of PPP in tertiary care too.

To conclude, the governments focus on healthcare in last year’s budget was a promising indication and we hope for more positive decisions this year. Indian healthcare stands at a point where it faces the challenge of dual burden of communicable and non-communicable diseases, a large and ageing population and large economic disparities.

There is a need for appropriate regulation to remove the current trust deficit and have a conducive environment for Healthcare services to expand and be available for the Indian population with appropriate technology , affordable patient care with high clinical outcomes.

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