In the Union Budget 2018-19, finance minister Arun Jaitley has announced a health insurance package of Rs 5 lakh to the benefit of 10 crore households. Whether it will be fully borne by the government or any portion to be paid by the consumer was not mentioned in the budget speech, however. Instead, the government should have provided this package for the benefit of all the people of India without collecting any money from low income groups and from the middle income groups a low amount while a fixed amount should be collected from the rest of the income groups.
Instead of providing Rs 5 lakh coverage for all, it would have been more beneficial to start from Rs 2 lakh as a base (the current level is only Rs 30,000 per family under RSBY) and increase the amount for critical illnesses and accidents. Also provision should have been made to provide emergency assistance to protect human lives on road traffic accident cases.
For this, the network of various insurance companies in India should have been utilized. Moreover, as hospital expenses are on the increase nowadays, the hospitals needed to be classified to fix rates and issue directives to control them.
A coverage of Rs 2 lakh is provided as coverage under Pradhan Manthri Jeevan Jyothi Bima Yojana. When we evaluate package with a view on the minimum wage act, the amount should have been at least Rs 10 lakh. If the compensation amount is less than Rs 5 lakh, the benefit becomes insufficient to meet expenses. This problem could have been solved if the people who pay the premium were willing to pay a proportionately increased amount to meet the excess amount.
Pradhan Manthri Suraksha Bima Yojana also suffers from this issue. In this scheme, a person has to pay Rs 12 to get the benefit of Rs 2 lakh. Instead, if he paid Rs 60, a compensation of Rs 10 lakh might have been given. In the event of an accident nowadays, what is the benefit if any amount less than Rs 10 lakh is given to meet the real expenses?
As per Section 80D of the of the Income Tax Act, a reduction in health insurance premium was given up to Rs 30,000. It has been raised to Rs 50,000. They might have given home insurance and accident insurance additionally to benefit from tax reductions within the same limit. If this was given many more people could have benefited from the schemes. In addition, natural calamities and accidents occur; the government does not have to bear high expenses. Low premium could have achieved by insuring people in groups to benefit all walks of the population.
Majority of people in India depend on agriculture and people all over are anxious about climate changes. There are promises to double the income in rural areas, but if the crops and livestock assets of the farmers are not protected, how this increase could be brought to the full benefit? The priority should also be given to provide reductions in GST in the premium paid by them.
In short, many important insurance packages are not included in the budget. Many existing packages needed an increase in the sum insured. Within the budget of Rs 5 lakh health insurance plan, by ensuring people’s participation, the whole population of India might have been brought under the coverage. In addition, a package could have started to bring all people having income to be brought under term life cover in proportion to their income.
(Viswanathan Odatt is the managing director of AIMS Insurance Broking Private Ltd)
