Budget banks on insurance; neglects deteriorating public healthcare

Stress on insurance poised to benefit the private sector

By Kundan Pandey
Published: Saturday 28 February 2015


This is the first time in the past seven years that the budget of the health sector has been slashed. This budget gives the sector Rs 6,000 crore less than what Budget 2014 did. Allocation to the Union Ministry for Health and Family Welfare (MoHFW) saw an increase of 81 per cent in the past six years—from Rs 21,680 crore in 2009-10 to Rs 39,238 in 2014-15. But the good run has ended (SEE BOX).

While presenting Budget 2015, Finance Minister Arun Jaitley continued his party’s rhetoric on health, saying that good health is necessary for a good quality of life, productivity and for being able to support his or her family. However, his idea of providing healthcare facilities to the public begins and ends with providing health insurance. It does not include concrete plans to improve public health infrastructure. The move would put public health in the hands of the private sector.

Jaitley did talk about providing medical services in each village and city, but the budget allocated falls desperately short. Instead of investing on public health systems, the budget focuses extensively on insurance. Public health experts would term this “an abdication of duty”.

In a blow to public health services, the minister announced the government’s intentions of amending legislation to help government employees choose between government-owned Employees State Insurance Corporation and private health insurance companies (recognised by the Insurance Regulatory Development Authority). As more and more people opt for private health insurance and move to private hospitals, the state of public health facilities is likely to deteriorate. This measure is likely to boost the private insurance sector.

Jaitley also announced an increase in tax exemption on health insurance premium from Rs 15,000 to Rs 25,000. For senior citizens, the limit will be increased from Rs 20,000 to Rs 30,000.

“For very senior citizens of the age of 80 years or more, who are not covered by health insurance, deduction of Rs 30,000 towards expenditure incurred on their treatment will be allowed,” Jaitley said in his speech.

The finance minister has also announced a special scheme to provide physical aids and assistive living devices to senior citizens living below the poverty line (BPL). Though Jaitley spoke about 100 million senior citizens in India, he did not provide a figure on how many senior citizens come under the BPL category. Hence, it is not clear how many people will benefit from this scheme.

The government has also announced an increase of around Rs 5 crore for the Jan Aushadhi programme which is meant to be extended to the entire country.

Fiscal year Budget allocated to health (MoHFW) in Rs. crore
2009-10 21,680
2010-11 25,055
2011-12 28,353
2012-13 29,273
2013-14 30,847
2014-15 39,238
2015-16 33,152

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