The Union Budget 2016 demonstrates a sharpened Government focus on indispensable social spending like healthcare and education to enhance people’s quality of life, especially those belonging to lower income groups. The announcements towards the insurance sector, in particular, are expected to offer more options to insurance buyers in the country.
There was a pressing demand by the insurance sector to eliminate the service tax on the insurance products. Honorable finance minister, Mr. Arun Jaitley did lend an ear to this demand, albeit partially. Effective April 1, 2016, service tax will be exempt on services of the general insurance business under the Niramaya Health Insurance Scheme.
A cut in the service tax on the insurance policies also leads to a reduction in the policy premiums making them more affordable.
Particularly for senior citizens, health insurance costs are skyrocketing and so are the premiums for health cover, since the associated risks are high as well.
In an attempt to make life easier for senior citizens, the Government has proposed a special health insurance scheme, which will be administered by the Department of Financial Services under the Finance Ministry.
In his budget speech on February 29, 2016, Finance Minister, Mr Arun Jaitley said, “Catastrophic health events are the single most important cause of unforeseen out-of-pocket expenditure which pushes lakhs of households below the poverty line every year. Serious illness of family members causes severe stress on the financial circumstances of poor and economically weak families, shaking the foundation of their economic security. In order to help such families, the government will launch a new health protection scheme, which will provide health cover up to INR 1 lakh per family. For senior citizens, an additional top-up package up to INR 30,000 will be provided.”
This health care scheme will be linked to the beneficiaries’ bank accounts to facilitate direct transfers of the subsidised amounts to the respective accounts. As per the proposal, the Government will subsidise the premium even further for those below the poverty line, by up to 90% via cash transfers directly into their bank accounts.
The Pradhan Mantri Suraksha Bima Yojana gives a renewable cover of one year accidental death/disability to the extent of INR 200,000/- for partial or permanent disability. This is offered to all savings bank account holders in the 18-70 years age group for a mere Rs.12 premium per subscriber, per annum.
Read more about Pradhan Mantri Suraksha Bima Yojana
There is also the Atal Pension Yojana and low-premium life insurance scheme called the Pradhan Mantri Jeevan Jyoti Bima Yojana for the welfare of senior citizens.
Presently in India, the Rashtriya Swasthya Bima Yojana (RSBY) offers health insurance coverage to Below Poverty Line families. Beneficiaries can avail hospitalisation coverage up to INR 30,000, and this coverage extends to five family members—head of the family, spouse and a maximum of three dependents. Beneficiaries need to pay a minimal registration fee of Rs.30 under this national health insurance scheme, while State and Central governments pay the premium to the insurer.
Read More- Health Insurance Schemes for Senior Citizens
Hike in Budget Allocation towards Healthcare, Launch of National Dialysis Programme
There is a hike in the budget allocation for the health ministry – up from INR 33,765 crore in 2015-16 to INR 38,892 crore, a little less than the INR 40,000 crore demanded by the ministry. The break-up is INR 19,037 crore towards National Health Mission, INR 16,555 crore towards health, INR 1,800 crore towards health research, and INR 1,500 crore for RSBY.
Mr. Jaitley also unveiled a new health protection scheme, in addition to the health insurance scheme, with universal coverage—a National Dialysis service programme. This is a crucial step in our country, which sees a high incidence of hypertension and diabetes, both of which affect the kidneys. This certainly is a welcome move by the Indian finance ministry.
As per the figures presented by Mr Jaitley, India sees almost 2.2 lakh new patients of End-Stage Renal Disease annually, which leads to an additional demand for around 3.4 crore dialysis sessions. Currently, there are approximately 4,950 dialysis centres in India, most of them in urban areas and in the private sector.
Mr. Jaitley announced, “Every dialysis session costs about INR 2,000—an annual expenditure of more than INR 3 lakh. Besides, most families have to undertake frequent trips, often over long distances, to access dialysis services, incurring heavy travel costs and loss of wages. To address this, I propose to start a ‘National Dialysis Services Programme’. Funds will be made available through PPP mode under the National Health Mission, to provide dialysis services in all district hospitals. To reduce the cost, I propose to exempt certain parts of dialysis equipment from basic customs duty, excise/CVD and SAD.”
Professor of Nephrology at PGIMER, Chandigarh, Dr Vivekananda Jha, commented, “Provision of dialysis has long been a benchmark for willingness of governments around the world to provide healthcare to its populations. Lessons learnt from implementation in other countries should be used to develop replicable schemes for delivery of good quality dialysis in an ethical manner. This should be supported by a quality assurance system to be developed in consultation with professional societies and national and international organizations. Quality should not be sacrificed at the altar of cost.”
However, these new health insurance schemes will pose a challenge to Private Insurance companies. It will be interesting to see how private companies plan to tackle the challenge posed to them by the Indian government’s latest schemes.