In the initial phase of Covid spread, when capping on hospital charges weren’t introduced by the Centre, individuals were left with hefty bills. This highlighted the need for more reforms in the healthcare sector.
Amid other expectations from the Union Budget 2021-22, experts have felt that it should also focus on “healthcare for all”. Finance minister Nirmala Sitharaman will present this year’s annual budget on February 1.
“Health insurance plays an important role in the development of the overall health care ecosystem. A demand-side push from the policy holders, would invariably lead to more and better health care facilities. The current tax limits for medical benefit are not adequate to cover most of the common health issues including the ones faced due to Covid-19, Vikas Vasal, national managing partner, tax, Grant Thornton Bharat told timesofindia.com.
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“Therefore, it is imperative that these limits are increased in line with the current economic reality to say Rs 1 lakh to encourage households to buy comprehensive health insurance cover, especially for senior citizens. This would also complement the government’s resolve to provide healthcare for all the citizens,” he added.
Krishnan Ramachandran, managing director and chief executive, Max Bupa Health Insurance stated that, “Health insurance is one of the most effective personal and public mechanisms to protect against rising health needs as well as rising medical inflation. Today, there is a need to raise awareness about the benefits of health insurance and bring more people under its ambit.”
“While Covid-19 has placed health insurance at the forefront as an essential need, we need to address the dual challenge of – low penetration of health insurance as well as under insurance. The government can play an important role from a policy standpoint to nudge people to buy health insurance,” Ramachandran told timesofindia.com.
Currently, tax deduction up to Rs 25,000 is allowed under section 80D for health insurance expenditure on self, spouse, and children. Additional deduction of Rs 25,000 on expenditure for parent’s health coverage and if they are senior citizens then Rs 50,000 can be claimed, he mentioned.
“Under the current circumstance of increased medical inflation, we expect the government to increase the deduction limit to Rs 50,000 for individuals and family. It will provide tax impetus to people and prompt them to invest in health as a long-term product, thereby increasing overall health insurance penetration rate in the country,” Ramachandran said.
“An enhancement in tax concessions has been helpful in many parts of the world to increase health insurance uptake by population. A large working class and young population must also be healthy to meet India’s goal of $5 trillion GDP by 2025, and health insurance will be a major tool in helping realise this goal,” he further stated.
According to Shikha Mittal, founder of Be.artsy, “Covid-19 treatment expense, is a big example for government to gauge the impact of financial instability a family can experience. Rebates that can ease pressure for a common household is what section 80D must aim for. Hence the Rs 25,000 cap for health insurance must be reconsidered to be raised to at least a lakh.”
The Economic Survey has strongly recommended an increase in public spending on healthcare services from 1 per cent to 2.5 to 3 per cent of GDP as envisaged in the National Health Policy 2017.
It has also highlighted that the step can significantly reduce the Out-of-Pocket-Expenditure (OOPE) from 65 per cent to 35 per cent of the overall healthcare spend.