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To encourage savings and promote healthcare, finance minister Arun Jaitley in his budget speech has increased the limit of deduction under section 80D of the income tax Act from Rs15,000 to Rs25,000 on health insurance premium. Photo: Pradeep Gaur/Mint (Pradeep Gaur/Mint)
To encourage savings and promote healthcare, finance minister Arun Jaitley in his budget speech has increased the limit of deduction under section 80D of the income tax Act from Rs15,000 to Rs25,000 on health insurance premium. Photo: Pradeep Gaur/Mint
(Pradeep Gaur/Mint)

Budget 2015: Rs33,000 crore for health is barely enough for current schemes

Ambitious National Health Assurance Mission, supposed to provide basic healthcare services, likely to be a non-starter

New Delhi: With an allocation of 33,152 crore for health, the government will barely be able to keep the existing healthcare programmes operational. The ambitious National Health Assurance Mission (NHAM), which was supposed to provide citizens basic healthcare services, is likely to be a non-starter.

The Narendra Modi government has, however, linked healthcare tightly to the private insurance sector with exemptions allowing more people to expand cover and increasing incentives to buy health insurance.

To encourage savings and promote healthcare, finance minister Arun Jaitley in his budget speech has increased the limit of deduction under section 80D of the income tax Act from 15,000 to 25,000 on health insurance premium. In case of senior citizens, the limit of deductions has been increased from 20,000 to 30,000.

“This is a very positive development as it will bring more people into the fold of insurance cover. This should help people to start thinking about insurance when they are young and also buy cover for their families," said Sanjay Datta, chief, underwriting and claims, ICICI Lombard General Insurance Co. Ltd. “This will allow middle-class families to access private healthcare for critical illnesses."

Public health experts, however, maintain that the government has incentivized the middle class to opt out of the public health system. “This is actually providing an option and incentive for middle class to stay out of the public system and go to private hospitals. Theoretically, the government should be the putting the tax money in building and strengthening a public system. Instead, they are giving incentive to people to go to the private sector. This will further strengthen the trajectory of a ‘dual system’—where people with money or insurance cover will go to private hospitals and the poorly resourced patients will be left at government hospitals," said Amit Sengupta, public health expert with Jan Swasthya Abhiyan, an right’s based health advocacy group.

The NHAM—linked with the Rashtiya Swasthya Bima Yojana (RSBY)—was supposed to provide a complete basket of services, including 50 essential medicines, a package of diagnostic services as well as around 30 alternative medicines such as ayurveda, homeopathy, etc., at government hospitals.

The private sector hospitals will gain tremendously from the insurance policy of the Modi government. “While we talk about universal health coverage, we are looking at the role insurance companies will pay. There is a reason it is called health ‘assurance’ and not ‘insurance’. The government was supposed to assure health to its citizens. But, clearly, this will just segregate quality of care offered to middle class and rich patients with human resources, skill, talent, technology everything concentrated in the private sector. The poorer patients will be left with government hospitals and the Indian government is clearly not investing any money in strengthening these hospitals," said an official in the health ministry.

Srinath Reddy, president, Public Health Foundation of India, said he was disappointed “to see that allocations for the health sector have not increased. The vision in the draft national health policy for universal health coverage through NHAM will not be realized if the health sector continues to be underfunded."

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