Enhancing India’s Healthcare Through Financial and Regulatory Reforms
As India’s healthcare landscape contends with its increasing demands, the 2024-25 interim budget, presented by Finance Minister Nirmala Sitharaman, featured a notable 14% rise in health sector funding. However, industry experts assert that for a material improvement in healthcare accessibility, further enhancements are necessary.
Proposed Enhancements for the India’s Healthcare Budget
- Increased Funding: The Union government initially allocated ₹90,171 crore to the health sector for FY 2024-25. Industry advocates, referencing the National Health Policy’s recommendation, argue for an increase in public healthcare expenditure to 2.5% of GDP by 2025. This escalation is crucial to align India’s healthcare spending with global averages and adequately support the nation’s health infrastructure.
Recommended Tax Reforms for Health Insurance
- Reduction in GST on Premiums: Currently, health insurance premiums are subject to an 18% GST, which can be particularly burdensome for senior citizens and those requiring extensive medical care. The suggestion is to reduce this rate to 12% and propose exempting certain categories such as senior citizens and individuals with specific disabilities or diseases from this tax.
- Modification of HSN Coding: For improved affordability, particularly for senior citizens, it’s proposed that they be categorized under a separate HSN code and taxed at a more manageable 5%.
Broadening Tax Incentives for Insurance Coverage
- Enhanced Section 80D Limits: The existing tax deductions under Section 80D of the Income Tax Act, 1961 allow up to ₹25,000 for individuals and ₹50,000 for senior citizens. To foster broader insurance adoption, it is recommended to adjust these limits to ₹50,000 and ₹1,00,000, respectively, linked to inflation and reviewed periodically.
- Incentives for New Policyholders: To encourage first-time buyers of health insurance, an introduction of a 200% tax exemption on the premiums paid could be considered, gradually aligning with the standard rates under Section 80D over four years.
Establishment of a Dedicated Health Regulator
The healthcare sector presently suffers from a lack of stringent regulatory oversight, particularly in hospital pricing and standardization of procedures. The establishment of a dedicated health regulator would ensure:
- Standardization of Procedures: Implement uniform operational standards and ethical practices across hospitals nationwide.
- Financial Governance: Enhance transparency in financial transactions between insurers and healthcare providers, fostering trust in public healthcare.
Implementation Focus for National Health Schemes
- Universal Health Scheme Oversight: For the expansive Ayushman Bharat Pradhan Mantri Jan Arogya Yojana, ensuring uniform and effective implementation across states is paramount. This initiative will facilitate better integration of multi-specialty and corporate hospitals and extend its reach to the deserving below-poverty-level populace.
Conclusion and Key Takeaways
To significantly fortify India’s public healthcare infrastructure and expand insurance coverage, the forthcoming FY25 budget should focus on:
- Increasing healthcare allocation to meet national policy objectives.
- Revising taxation on insurance premiums to enhance affordability and inclusivity.
- Enhancing tax incentives for broader insurance adoption.
- Establishing a regulatory authority for healthcare to ensure standardized and ethical practices.
These measures will collectively enable a more robust, equitable, and sustainable healthcare system in India, providing a safer, healthier future for all citizens.
Estabizz Fintech offers expert analysis on India’s FY25 healthcare funding and reforms. Understand the proposed tax incentives, the demand for increased health budget allocation, and the necessity of a health sector regulator to ensure comprehensive healthcare coverage.India’s Healthcare Budget 2024 Financial Reforms & Regulatory Insights
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