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Govt should incentivize both customers and insurance providers in this Budget

The healthcare security of a nation primarily rests on easy access to quality care, transparency of costs and provisions for financial cushion which is made available by insurance providers. Access presumes reasonable medicalcare cost while transparency assumes fair dealing.

Ashish Mehrotra        Last Updated: January 30, 2017  | 19:48 IST
Govt should incentivize both customers and insurance providers in this Budget

Ashish Mehrotra
The healthcare security of a nation primarily rests on easy access to quality care, transparency of costs and provisions for financial cushion which is made available by insurance providers. Access presumes reasonable medicalcare cost while transparency assumes fair dealing. This is all the more important for a populous and low income country like ours where healthcare cost has been rising sharply over the last decade together with increasing dependency on private healthcare providers where malpractices related to treatment, diagnosis and overbilling have become a big cause of concern.

According to a recent government study, the cost of healthcare in India rose nearly three times during 2004 to 2014. Year on year, the rise was sharper than inflation - 10.7 per cent CAGR for the 10-year period to be precise. An average urban dweller in Tier I and Tier II city today spends over Rs 25,000 annually on health care provisions. The situation starts looking grimmer when one realizes that despite the escalating healthcare cost, there is no regulatory body to ensure that people get a fair deal both in terms of quality and cost of treatment. Transparency and accountability in the private healthcare domain has unfortunately been missing.

FULL COVERAGE: UNION BUDGET 2017-18

To add to the woes, percentage of people opting for health cover remains disappointingly low. Majority fail to realize that once they are hospitalized for some serious conditions, they risk losing their hard earned savings and are in real danger of falling into asticky debt trap. This is a double whammy.

To begin with, policy makers need to recognize that private healthcare footprint will keep increasing as public healthcare system has largely failed to deliver and elicits little confidence among general public. People's preference for private healthcare providers has also given rise to undesirable practices which has pushed up the individual and total healthcare cost. Over diagnosis, avoidable admittance, premature surgery and over billing have become common together with lack of transparency and fairness in dealings.

FULL COVERAGE: RAILWAY BUDGET 2017-18

The problem has been aggravated as there is no regulatory body to keep an eye on the sector and to ensure that the sector plays by the given set of rules and where treatment costs are standardized. Everyone is aware of the deep flaws in the system but a regulatory body has remained a pipedream, despite repeated demands from experts and common people alike.This is surprising and contrary to the best medical regulatory practices globally.

The new budget must bring in healthcare service providers under a regulatory framework and treatment cost must be standardized. Along with putting a check on malpractices which raises healthcare costs and impacts healthcare security of the nation, we need to incentivize both customers and insurance providers in this budget.

Specific measures include:

Longer duration for carry-forward losses: 
Currently, business loss and depreciation can be carried forward for 8 years only whereas specialized health insurance companies require minimum 10 years to break-even and another 3-4 years to clock profits. Due to this mismatch, insurance providers tend to lose credit of initial years losses. Hence, for specialized health insurance companies, period of carry forward of business loss and depreciation should be extended to at least 12 years.

Tax exemption for multi-year premium policies: As of now, tax exemption is available only in the year of payment. To encourage people to insure themselves for longer period, tax exemption should be available each year based on number of years covered. Alternatively, tax exemption can be multiplied by number of years of coverage. For example, in case of 3 year premium paid, limit should be Rs. 75,000 for self, spouse and kid (i.e. 25,000 per years x3 yrs) and Rs. 90,000 for senior citizen parents (i.e. 30,000 per years x3 years).

Broader service portfolio: Health Insurance Companies being specialized players, should be allowed to offer Wellness service features beyond Doctor Consultation, diagnostics and Pharmacies, as allowed by Health Regulation 2016.

Long-term saving linked health insurance product: The Government should permit offering of long term Saving linked Health Insurance Product, which is the need of the hour. The pre-defined component of premium would go under investment category (like unit linked life insurance product). It would grow over time and can be utilized for purposes like funding post-retirement premium post 60 years and other expenses which are generally not covered by Insurance contracts. These are simple but very desirable measures, in the interest of common people which the coming budget must make provisions for. If undertaken, this will galvanize and transform the healthcare architecture of our country. We do look forward with great expectation at the new budget to ring in good times for consumer and health insurance sector.


(The author is MD & CEO Max Bupa Health Insurance)


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