The Finance Minister during the heady days of demonetization announced a hefty 8 percent and 10 percent rebates respectively for life and general insurance premiums paid digitally to the state-owned insurance companies. But this will in all likelihood benefit the urban middle class by and large because they are ones in whose conscience the idea of insurance is embedded. In others, first there must be an awakening about the need for insurance. Farmers know a bit about crop insurance. But that is about all.
The joke doing the rounds in the last decade of the last century was private insurers advertised but the state-owned LIC rode piggyback on such ads. Indeed, LIC has become the byword for life insurance in the country. At the same time, it is equally true that the insurance penetration is abysmally low in the country---about 6 percent of the population. Insurance companies need a special tax break---a weighted deduction of may be 150 percent must be allowed for campaign expenses so that insurance awareness and penetration increase.
Youngsters are incentivized to insure their parents by section 80D of the Income tax Act with a special and additional Rs 30,000 deduction if even one of the parents is a senior citizen. Otherwise, they have to settle for Rs 25,000. However, with longevity improving and the tribe of very senior citizens (80 years and more) growing, it is not only parents who need to be insured but great grandparents as well.
The government should allow a special deduction for those who take care of their great grandparents as well. The limit of Rs 25,000 or Rs 30,000 per family is too restrictive and treats small and large families alike. The limit rather should be per person.
Geriatric Medicare indeed needs special attention. Not only do hospitals need to have a separate department and facilities for them (geriatrics), but insurers should also be persuaded to look into the health insurance needs of the elderly more sympathetically. As it is, the premium for senior citizens is very high. Either the government should bear part of the premium payable on the lives of senior citizens or it should allow geriatric claims settled a special tax treatment----by way of say 150 percent weighted deduction or treat it as passing muster under the mandatory CSR (corporate social responsibility) spend.
Health insurance ought not to be viewed strictly as an insurance business. In the USA, hospitals too double in as insurers by offering schemes under which one can pay an annual payment akin to premium and get treatment in the hospital should the misfortune of ill-health strike. This should be encouraged in our country also. It is known as managed Medicare. People rush to the hospital close to their homes in case of emergency. Even otherwise, proximity is a factor in the choice of a hospital one goes to. Why not allow large hospitals to offer managed Medicare services?
To wit, one should be allowed to pay Rs 5,000 per person in the family to a hospital by way of one-time payment at the beginning of the year. And the hospital would be bound to treat the patient without charging any more amount should he fall ill. The disadvantage is one would be tied to a particular hospital unlike in health insurance where he has a slew of hospitals to choose from. Furthermore, with super-specialty hospitals springing up, there could be some hesitation in plumping for general hospitals offering managed Medicare. Nevertheless, the idea must be taken forward if only to rein in pure-play general insurance companies.
The animus between hospitals and insurers would also incidentally end when managed Medicare takes roots in the country. At the same time, it must be acknowledged that hospitals offering managed Medicare may be less than exacting in treating its patients who have paid a pittance especially when the treatment is expensive or prolonged.
Budget 2017 should give parity of treatment to managed healthcare at par with health insurance premium even at the risk of angering insurance companies which may resent intrusion into their turf by hospitals.
Updated Date: Jan 05, 2017 12:00 PM