The world's largest government funded healthcare programme which is expected to benefit 500 million beneficiaries was announced by the Indian Finance Minister Arun Jaitley in his Budget proposal presented yesterday for the 2018-19 fiscal year (FY2019).
The National Healthcare Protection Scheme (NHPS) scheme will provide up to INR500,000 (US$7,810) per family per year for secondary and tertiary care hospitalisation, Mr Jaitley said.
“This is a welcome move not just to maintain a healthy India but, I believe, also to create several lakhs of new jobs in the country as new healthcare facilities will come up in smaller districts and villages,” said Mr Antony Jacob, CEO, Apollo Munich Health Insurance. The programme, he believes, will go a long way in helping India's poor and underprivileged.
Mr Bhargav Dasgupta, MD & CEO of ICICI Lombard General Insurance, feels that through the Budget proposals the government has focused on inclusive measures targeting critical areas of agriculture, education, health, power among others. “The introduction of INR5 lakh cover for families and the increase in medical insurance tax exemption for senior citizens indicate the focus of policymakers to ensure adequate protection against health hazards for India’s populace,” said Mr Dasgupta.
Towards holistic healthcare protection
Healthcare in India is largely underfinanced, with a major proportion of the population relying on out-of-pocket spending during a medical emergency. Conservative estimates reveal that currently around 300 million people or 25% of the country’s population are presently covered by some form of health insurance, while for the rest of the population any medical emergencies are financed by loans and sale of assets leading to huge rural distress and suicides.
“The announcement to build a holistic healthcare protection ecosystem is a revolutionary move undertaken by the government,” said Mr Mayank Bathwal, CEO of Aditya Birla Health Insurance. He highlights that health insurance in the country today contributes to nearly 5% of the total healthcare spends, clearly reflecting that most citizens are either under-insured or un-insured.
Mr Karni S Arha, CFO of Aviva India, said: “The National Health Scheme of the government is a great initiative and will act as a catalyst in elevating the insurance sector and in turn healthcare services for the uninsured and underinsured population.”
Mr Jaitley also said that “the government is steadily but surely progressing towards the goal of universal health coverage”.
Multiple initiatives for senior citizens
India is the second most populated country in the world and 20% of the population is above the age of 60 years. The aging population has typical healthcare needs and to fund them, they are keen to seek health insurance cover. However, post retirement, they are worried about having to fund health insurance premiums.
The various Budget initiatives announced yesterday to enhance the affordability of health insurance for seniors is a welcome move and will go a long way in providing them with a financial cushion in medical adversities. Senior citizens can now claim a tax deduction of up to INR50,000 per annum on health expenditure and health insurance premium, from INR30,000 previously.
In other proposals that would give a boost to the insurance industry, Mr Jaitley said that infrastructure is the growth driver of the economy. He said: “Our country needs massive investments estimated to be in excess of INR50 lakh crore in infrastructure to increase growth of GDP, connect and integrate the nation with a network of roads, airports, railways, ports and inland waterways and to provide good quality services to our people.”
He announced that the Finance Ministry would leverage the India Infrastructure Finance Corporation to help finance major infrastructure projects, including investments in educational and health infrastructure, on strategic and larger societal benefit considerations.
He cited plans for strengthening the railway network and enhancing its carrying capacity have been a major focus of the government. Railway capex for FY2019 has been pegged at INR148,528 crore. The government proposes too to expand the country's airport capacity by more than five times to handle a billion trips a year.
GIC Re's response
In a statement describing the FY2019 Budget as “forward looking and progressive”, Mrs Alice G Vaidyan, Chairman and Managing Director of the industry heavyweight and state-run reinsurer GIC Re, said: “This year’s Budget had assumed great significance, since it was the first one after the implementation of GST, the boldest tax reform in India since independence. The insurance industry – both life and general, were expecting that their demands would be met. The industry demanded lower GST rates and input credit on insurance premiums - in view of the fact that the insurance sector holds strategic significance, especially life and health insurance, and offers a first layer of financial security to Indian masses. The pre-Budget clarification that no GST will be levied on agri-insurance, was certainly helpful.” GST was implemented in India on 1 July 2017.
Mrs Vaidyan continued: “Overall, the Finance Minister has done a fine work of balancing the fiscal deficit with growth priorities and has given a positive thrust to all important segments of the economy.
“Health insurance coverage is a much needed measure to address the protection gap for the Indian population and will boost penetration in a major way. However, its success will depend upon adequate pricing based on actuarial assessment. We have a very good template in terms of the Pradhan Mantri Fasal Bima Yojana for boosting penetration of crop insurance.
“INR5 lakh per family and 10 crore families – the sum insured involved is INR50 lakh crore. This has the potential to match, if not dwarf, the crop segment which saw momentous growth during the last two years.”