Budget 2021: Expectations for healthcare sector in a crucial year for wellness

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Covid-19 pandemic has brought health as the centre focal point of our lives. The pandemic strained the healthcare infrastructure in India. At policy level, Government of India issued telemedicine guidelines, issued notification about retail sale of drugs at door step, launched production linked incentive (PLI) schemes for domestic manufacturing of critical Key Starting Materials (KSMs), Drug Intermediaries (DIs), Active Pharmaceutical Ingredients (APIs), and Medical Devices. A scheme for creation of four Medical Device Parks was announced to increase competitiveness and improve availability and affordability of medical devices. Govt of India also announced an ambitious National Digital Health Mission (NDHM). On Jan 16, 2021, the Prime Minister inaugurated vaccine drive for two domestically produced vaccines. The vaccines are being provided free to the most-prioritized beneficiaries including 1 crore healthcare workers and 2 crore front-line workers.

Yet, the healthcare industry itself needs much more support for sustainable growth. Some of the expectations of healthcare industry from the Union Budget 2020-21 are:

•    Increase in public healthcare expenditure: Healthcare expenditure by the Government of India needs to be increased significantly. We need not wait for 2025 to reach the target of 2.5% of GDP to be spent in healthcare and the target should be completed in a year or two to improve healthcare infrastructure.

•    Incentivize private investment in healthcare infrastructure: Incentives to the private sector should be provided to modernize healthcare facilities and increase investment in rural and remote areas. This will also generate employment. Public-private partnerships should be increased for make-in-India and startup-India programs. Incentives should be brought in to encourage collaboration between academia and industry.

•    Focus on preventive care and wellness: Although current attention is on Covid-19 pandemic, it is important to increase the proportion of expenditure on preventive healthcare and wellness. This will help in decreasing the toll on healthcare infrastructure by non-communicable and lifestyle diseases. A tax holiday for organizations engaged in promotion of wellness of customers and employees will be a good move. Prevention of diseases should be promoted by improving availability of clean water and sanitization.

•    Expand health insurance coverage: While the lower economic sections have been covered under Pradhan Mantri Jan Arogya Yojana (PMJAY) health insurance scheme, it is time to extend insurance coverage to the middle class too for moving towards universal health coverage. To encourage people to invest in Health insurance, rebates under section 80D should be increased. GST on health insurance should also be abolished or rationalized.

•    Encourage development of digital health ecosystem: Increased budget allocation for promotion of telemedicine, home-based healthcare and national digital health mission implementation will help in building a strong healthcare ecosystem. Telemedicine has potential to improve access to healthcare in rural and remote areas. Home-based healthcare will reduce burden on limited healthcare facilities. Digital Health and Innovations should be encouraged for India’s future growth in population health.

•    Invest in increasing healthcare manpower and skilling: There is a severe shortage of healthcare manpower in the country. Extra funds must be allocated for creation of sufficient manpower and for skill development of teachers, nurses, paramedical staff and care providers. Education had to completely move to online mode during covid-19 pandemic. Hybrid (mixture of online and offline) form of healthcare and medical education should be promoted.

•    Focus on mental health: Covid-19 has led to large scale mental health issues. Budget for mental health in India should be increased. Mental health consultation (and not just mental health illnesses) should be covered under health insurance.

•    Rationalize GST on healthcare products and services: GST should be made zero for healthcare products including drugs, medical devices and health insurance premiums. This will increase affordability and accessibility of healthcare products and services. Additionally, accumulated input tax credit should be refunded to healthcare service providers.

•    Correct inverted duty structure: Healthcare sector suffers from inverted duty structure. That is, the total cost of input raw materials is more than the cost of a complete product. To encourage Atmahirbhar Bharat, the inverted duty structure should be corrected. Furthermore, export of healthcare products should be incentivized to promote healthcare innovations.

•    Allow market-based fair pricing: While profiteering should be discouraged, profit making by healthcare organizations is essential. Market-based fair pricing should be allowed.

These are the author’s personal views.

-    Written By: Dr Bhagwati Prasad, Senior Associate Dean – Healthcare Management, S.P. Mandali’s Prin L. N. Welingkar Institute of Management & Research Development (WeSchool)