The Union Budget :Should be a “Health-quake” for the country?what the healthcare sector is expecting from budget which will be presented on February 1?
- With a majority in Lok Sabha, the Modi Government can amend the constitution to make health a fundamental human right (on the same grounds like the 1948 WHO Constitution) and commit to ensuring the highest attainable level of health for all. This will be historic step for India.
- Priority sector status must be accorded to the healthcare industry. This will ensure availability of funds at minimal interest rates which will encourage new private players as well as old ones to expand in the tier III / IV cities and even in the rural country side.
- A separate bureaucratic cadre christened as “Indian Healthcare Services” on lines like IAS should be
- We need a multi-pronged approach from the government to strengthen and reform the healthcare sector in India. On the one hand, it involves improving the state of public healthcare by increasing budgetary allocation, establishing more Medical/Paramedical/Pharmacy/Nursing colleges and improving primary healthcare facilities.
- On the other hand, it involves measures to enable the private sector spread its presence beyond the urban population. This will help in improving accessibility for secondary and tertiary care in tier 2/3 towns and rural areas. For the latter to happen, the government must offer major incentives and tax breaks to private healthcare organizations setting shop in non-urban areas. These incentives can include income tax breaks for first five years of operations, help in procuring land, making medical equipment GST free for such hospitals and relaxation on service tax on hospital inputs.
- Similarly, establishing a mechanism to offer fund support or subsidization in treatment cost to private hospitals in smaller towns and rural areas can go a long way in bridging the accessibility gap. This will also help generate jobs and make quality healthcare more accessible.
- Home and Ambulatory Healthcare should be recognized as a separate sub-sector of Healthcare as it forms the backbone of primary healthcare and addresses lack of adequate hospital beds especially for rural areas. This should also include increased tax incentives for preventive health checkups under 80D.
- Allowing FDI in E-pharmacy sector and recognition of E-pharmacies under Drugs and Cosmetics Act is another impending reform.
- The government’s flagship scheme Ayushman Bharat PMJAY, in its first year, has managed to empanel over 15,000 hospitals. Currently only 3.57 crore families of the original 10.74 crore families have been issued golden cards, and this number is expected to go up significantly this year. The government will therefore need to substantially increase its previous year’s allocation of INR 6000 crore as it attempts to expand the scheme’s footprint this year and eventually merge it in the long run with other schemes such as ECHS, ESI, and CGHS.
- The government must consider credit guarantee for hospitals under PMJAY and other Government insurance schemes, since payments take time to come to the hospital. The government should incentivize /give credit guarantee to lenders who are willing to fund the receivables.
- To stimulate the growth of indigenous medical devices manufacturing in India, issues specific to the medical devices industry needs to be addressed. Some of them include-
- Unfavourable duty structure: An unfavourable duty structure in many segments/sub-segments make imports cheaper than manufacturing in India.
Lack of comprehensive laws and lax enforcement mechanisms for IP protection:
IP protection for novel technology is critical for the success of global medical devices players investing outside their home market. In the absence of enforceable IP laws, global players would lack confidence to invest in manufacturing assets, thus limiting India manufacturing.
Ease of doing business:
India still lags behind most countries in terms of ease of doing business. Due to complex regulatory requirements, products currently require multiple agency approvals. This leads to time delays at multiple layers, at both the national and state levels.
Limited availability of skilled workforce and restrictive labour laws:
Despite sufficient human capital, there are unfavourable labour laws and limited trained workforce in India to install operate, repair and service equipment.
Inadequate ecosystem support (suppliers, raw material etc.) for medical device manufacturing:
- Medical Technology can bridge the distance between the care provider and the patient thereby helping patients in remote areas access specialist and specialized equipment present in large cities far away. Technological advancements in the fields of health monitoring and diagnostics can help in detecting health issues early on thereby reducing overall cost of care and enhancing wellness levels of the society. Similarly, technological interventions are rapidly increasing the precision and efficacy of treatment modalities thereby improving clinical outcomes. However, to realize this opportunity at scale rather than as isolated, fragmented initiatives, both the government and the industry will need to make concerted efforts.Some of the key areas where government could intervene include:
- Setting up an independent authority for medical devices and enabling faster grant of patents
- Supporting local demand of medical devices through public health and health insurance programs as well as by collaborating with the private sector through PPP models
- Providing relevant financial incentives for the industry
- Supporting innovation in India by providing capital and infrastructure
- In addition, as the road map for medical devices manufacturing is charted, learning that created growth trajectories of other industries can be adopted:
- Liberalization and opening up of markets
- Policy reforms (ease of doing business)
- Financial and non-financial incentives (in terms of import duty, export duty, SEZs)
- Designing comprehensive laws and a robust regulatory environment for high IP industries
- Government expenditure to initiate ecosystem Development
- Government should also come up with medical innovation fund separately to boost health tech start-ups.
Other issues to be addressed by the Government include–
- Allocation of funds for improving the school infrastructure to ensure hygienic and healthy school environment, improved meal experience, clean hand wash and sanitation facilities. The Government must focus on the convergence of drinking and potable water schemes of the Jal Shakti Ministry with the Mid-Day Meal Programme by earmarking the budget for the scheme.
- The Government must make budgetary allocations for monitoring the growth and development of all the children in Primary and Upper Primary Schools and set up a parallel linkage with the National Health Mission in cases of referrals. We are also hopeful that the MDM Programme will be aligned with the parameters of POSHAN Abhiyan to address child malnutrition using various interventions.
- Life saving equipment such as ventilators, BIPAP and CPAP, etc. have been placed under heavy taxes. Even something as basic as crutches and wheelchairs have been put under the 5% to 7.5% GST bracket. These are essentials and should not have been taxed. It is perplexing to see how the medical equipment spare parts are being taxed under the highest slot of 28% GST. This is highly debilitating for the healthcare industry. There should be a critical evaluation of the situation and that there should be serious thought given to make healthcare essential equipment tax free.
- AI has the potential to solve many problems of Healthcare Delivery in the country. Access to large volumes of quality data is vital for the success of AI. More budget allocation towards R&D in medical device innovation and digitization of care delivery process through right investment in tools, infrastructure and training will help us to meet some of the challenges in the Healthcare Industry.
- The government should accord due recognition to the emergency medical services (EMS) industry and recognise it as an independent sector within the healthcare industry. 90% of the EMS space is controlled by the government. The sector is in urgent need of impetus in the form of budgetary allocation of funds so that even the remotest parts of the country have access to timely quality medical care. There is a severe demand supply gap when it comes to the availability of ambulances in India with the ratio of ambulances per capita pegged at 1:146249. We need to move to a ratio of 1:60000 and this can only happen if the government incentivises the industry in the form of subsidies. The government should also invest in setting up skill centres for training paramedics and emergency medical technicians. While the government is already taking steps to improve road connectivity, we believe the government should look at increasing the accessibility of emergency medical services through station ambulance services on national highways and medical units on trains.
- Globally there is acceptance of the growing significance of molecular genetics in diagnosis as well as clinical management of various cancers. The government should help create a regulatory environment extremely conducive for promoting research in the field of cancer genetics by creating a hub for cancer research. Quality research in cancer genetics will go a long way in making new therapies available to Indian patients at very affordable costs.
- The Indian Pharmaceutical industry is a sunrise industry with a competitive advantage for India. We should leverage India’s position by unleashing entrepreneurial spirit through policy stability and ecosystem.
- There is an utter need to spread awareness amongst the masses to promote health insurance which has become a must considering the current healthcare cost in the country. Enhancing the tax rebate under Section 80D from the current value of Rs. 25, 000 to Rs. 1,50, 000 can be a great move by the government. Under this year’s budget, the government must waive off the GST charges which are currently 18% on health insurance premiums.
- Another expectation in this year’s budget is giving the consumers ability to pay level premiums to 5 years with multiple payment modes as available in other insurance industries like Life Insurance. The payment methods can be extended to monthly, quarterly, half-yearly, and limited pay in order to make the premium payment process convenient for the consumers. This will surely make Healthcare in India affordable and accessible.
- Currently, the health insurance industry in India has a long gestation period and it takes a long time for the insurers to achieve a break-even. As per the industry experts, the limit of eight years for carry forward and set-off of business losses is not sufficient. This limit must be increased.
India is the second most populous country in the world. The death rate has declined but birth rates continue to be high in most of the states. Health care structure in the country is over-burdened by increasing population. Family planning programs need to be (re)activated by the Government.
To boost Quality in Healthcare, the Government must incentivize organizations who have NABH Accreditation; it could be in terms of tax benefits, GST benefits, Local self governments tax benefits like property tax, assessment tax, etc.The Government of India has already made a robust policy and template for PPP investments in infrastructure projects. Similarly, it must give the Healthcare sector projects through the PPP route a boost through a structured policy and templates to cut red tape and quicker implementation of PPP projects in healthcare.
PhD, (BITS-Pilani),MD(Bom), MPhil(BITS-Pilani), DHA(TISS),MCPS(Bom).
Advisor-Mentor, Hira Mongi Navneet Hospital, Mumbai
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