In his presentation of the fifth Union budget, Finance Minister Arun Jaitley has emphasized heavily on the agriculture and health sectors. While the anticipations over increasing tax slabs have fallen flat, and the LTCG on equity has arrived as a dampener, Jaitley has not disappointed Indians in terms of health and social welfare offerings.
The BJP Government announced the launch of a national healthcare scheme, which has been touted to be the largest healthcare plan in the world. About 10 crore families are to be covered under this plan with Rs 5 lakh offered per family towards secondary and tertiary healthcare. This came along with the announcement to set up new health and welfare facilities and increase tax deduction towards health-related expenses. Let’s look at some of the major health and insurance-related takeaways from this year’s Union Budget.
Heathcare Made More Affordable:
The National Health Protection Scheme (NHPS) is the first of its kind, as it offers to extend healthcare benefits to up to 10 crore families/50 crore people under the plan. That is about 40% of the population. While the details on the identification process of these families or the healthcare institutions that are going be covered in the plan are yet to unfold, this is certainly a strong move to protect the interest of low income groups.
According to the RBI-appointed Tarun Ramadorai Committee for household finances, a single hospitalization can push a family into a debt cycle. Rural deaths happen in numbers due to lack of affordability and access. This scheme, if executed as per plan, could provide great socio-economic value to the nation.
Aarogya Sri is a similar state government-run programme in undivided Andhra Pradesh which offers a cover of Rs 2.5 Lakh to families under the poverty line. This floater plan has been in place since 2007 and has seen the low income segment benefit from it ever since. The scheme is in operation with different names after Andhra Pradesh and Telangana are created. The nation-wide health cover should yield similar results.
The National Health Protection scheme came as an addition to the existing PM Jeevan Bhima Yojana and Suraksha Yojana which provide Rs 2 Lakh life cover and Rs 2 Lakh personal accident cover respectively. In this budget, the government has proposed increasing the reach of these low-premium insurances by including more people under the plan “on a mission mode”. The SCs, STs and OBCs are expected to be brought under these schemes. This would not only provide the much-needed social safety nets for these groups but also create mass awareness of term insurance and personal accident covers.
The government has also put in Rs 600 crore to support tuberculosis patients in a move to tackle the still high number of tuberculosis deaths. Under this initiative, each patient who is undergoing treatment will receive Rs 500.
Apart from making healthcare affordable for a large chunk of the population, the National Health Protection Scheme will also create awareness on insurance in general. The impact would be similar to that of the Jan Dhan Plan which ensured every Indian has a bank account. With the government increasingly focusing on digital finance and digital delivery of welfare schemes, it is vital that every family have a bank account. Jan Dhan accounts have had that impact in introducing millions of Indians to the idea of banking. The NHPS would similarly introduce them to the idea of health insurance – that they do not need to suffer in silence or get into crippling debt to fund a family member’s treatment.
With Government providing a safety net of Rs 5 lakh, every family inside and outside the ambit of the plan would consider this amount as a benchmark while assessing the sum assured required for their insurance. Considering the cost of treatment in only going up with every passing day, this benchmark would help people take better insurance buying decision.
Deduction for Senior Citizens:
The senior citizens can now claim deduction of Rs. 50,000 instead of Rs. 30,000 towards medical insurance premium under Section 80D. Additionally senior and super senior citizens can claim up to Rs. 1 lakh for expenditure on treatment of critical illnesses. This is a much-needed push to ease up the senior citizens grappling with the high medical costs. The increase in these caps would encourage more people to buy adequate health insurance.
Increase in Vaya Vandana Cap:
Annuity plans pay guaranteed income but the rate of return is not comparable to other financial assets such as PPF, fixed deposits, and mutual funds. Last year, Jaitley had introduced the PM Vaya Vandana Yojana that guarantees a return of 8% on a pension plan by the LIC. The maximum purchase price of Rs 7.5 Lakh has been doubled this year to 15 lakh, making the plan more attractive for senior citizens.
Other Healthcare Spends:
In an effort to improve the quality of healthcare education and services, Jaitley has announced plans to set up 24 government medical colleges and hospitals. He has also said that the country would see 1.5 Lakh new wellness and health centres come up to tackle the growing healthcare needs. The government will put in Rs 1,200 crore for this purpose. These are complementary steps towards making high-quality and affordable healthcare accessible to a vast majority of Indians.
The writer is CEO, BankBazaar.com.