Satish Gidugu, CEO, Medi Assist Healthcare Services
There is a need to reduce the GST rates on insurance premiums, allow input credit on GST paid towards employee health insurance and eliminate perquisite tax on employee medical reimbursements
The COVID-19 pandemic has brought about an intense focus about preventive healthcare and implored citizens to secure themselves by purchasing an adequate health insurance cover.
However, in the backdrop of falling incomes because of medical exigencies or job losses, many Indians are scaling down the coverage of their health insurance policies in a bid to save on the premium amount expended.
Adding to this alarming trend is the fact that nearly 30% of the Indian population remain uninsured and you have a dangerous situation that is detrimental to our country’s goal of achieving Universal Health Coverage (UHC) by 2030.
Incentivising health insurance
To reverse this course, it is imperative that tax-paying citizens are incentivised to opt for a
higher health insurance cover while the Government focuses on its slew of initiatives aimed at the bottom 50% of India’s population.
To improve the coverage of health insurance we also need to remove hidden disincentives so that it becomes more affordable.
There is a need to reduce the GST rates on insurance premiums, allow input credit on GST paid towards employee health insurance and eliminate perquisite tax on employee medical reimbursements.
There is also an immense opportunity to accelerate digital health push using the insurance industry as the engine.
As Ayushman Bharat Digital Mission (ABDM) begins to create a digital highway, the insurance industry needs to be incentivized and pushed to accelerate the integration of access and financing with ABDM.
We need to understand that the insurance industry, as the largest single consumer of the healthcare services, has the best understanding of access to healthcare and financing of costs.
This is the exact mix required to make ABDM successful in delivering real outcomes like universal coverage and effective policy decision making.
Integrating with different ecosystems
Some of India’s largest employers like Indian Railways, PSUs, Armed forces, Central Government, and the State Governments spend upwards of 40,000 crores on employee health benefits and have built their own healthcare delivery infrastructure too. Integration of this ecosystem with the insurance industry will create a significant impact on the overall adoption of health insurance.
The overall industry in India can also play a role in expanding insurance penetration and building common infrastructure if CSR spends can be routed for this purpose in the communities they employ and serve and if ESIC contributions can be substituted with equivalent health insurance covers.
Proposing tax deduction in the forthcoming Union Budget
Doubling the existing tax deduction limits under section 80D of Income Tax Act for medical insurance premium paid will result in savings for the taxpayer, which in turn can be utilised to enhance the health coverage and include all dependents in the family.
For senior citizens who are more susceptible to the financial risks involved in a serious illness,it would similarly be prudent to double the current limits to account for the higher premiums that they are likely to incur.
If announced in the forthcoming Union Budget, this measure would help the ordinary Indian citizen immensely and will help them to be better prepared for any future pandemic.