Reviewing Budget announcements for healthcare sector: Anshul Mittal, Konsult

The healthcare sector in India is big, both in terms of employment and revenue, thanks to the huge population. The sector is estimated to grow by $ 280 billion in size by 2020. However, there exist ample things to worry about. The sector is hugely backward when it comes to medical diagnosis and treatments, very high mortality rates, lack of awareness and malnutrition, amongst a myriad of other concerns. The sector is patchy and sporadic. On one hand there are a number of hospitals, nursing homes, and clinics and on the other hand, there is unaffordability and unavailability. Access to quality healthcare is one of the most pressing concerns in India and that has been a constant case, since long. India’s expenditure on healthcare is drastically lower if compared to other fellow BRICS and SAARC nations.

Prior to the union budget which was announced on Feb 01, these are some of the key reforms that the industry wished the finance minister to introduce.

• Creation of an efficient healthcare budget with appropriate fund utilization and management
• Liberal health care financing and fund allocation policy customized to specific needsSetting up of an audit mechanism and full proof financial monitoring
• Better HR and staff planning
• Increase in health insurance products and improvement in policies
• Providing national priority status to health sector and establish a healthcare infrastructure fund
• Make health insurance coverage mandatory
• Complete tax exemption on preventive health management and use of multi-pronged preventive strategy
• Increase depreciation rate on medical devices
• Create healthcare systems based on innovation and technology
• Encourage healthcare facilities in tier II, III and IV cities
• Increase investments in health and family planning front

Finance minister, Mr. Arun Jaitley, declared that an action plan has been prepared to eliminate Kala azar, Filariasis by 2017, leprosy by 2018, measles by 2020 and tuberculosis by 2025. He also said there is a plan to curb IMR (infant mortality rate) from 39 per 100 live births in 2014 to 28 per 1000 live births in 2019 and MMR (maternal mortality rate) from 167 per one lakh live births from 2011-13 to 100 per one lakh live births by 2018-20. The Government, however, did not commit as to how this ambitious target should be achieved. Particularly, the move to ensure that 1.5 lakh health sub-centres (primary health centres) be transformed into health wellness centres (looking at overall health) as a very good move. Also, the announcement on dealing with the skill availability in the form of specialist doctors is a good move by the government. However, many of these reforms won’t have much impact if we keep in mind the fact that, it’s a country of a billion plus people.

It is a well acknowledged fact that India’s healthcare sector is inundated by low and stagnant government spending and high out of pocket expenditure. On one hand, there is a burden of communicable and non-communicable disease, while on the other hand, there is a huge challenge to make healthcare affordable and accessible for all. Healthcare providers, medical devices manufacturers, and the pharma industry have always been wishing for some major policy reform with regards to regulations, tax and prevalent duty structures. Infrastructure wise, the sector is always lagging behind. The hospitals are always running short of beds or there is a dire lack of basic medical equipment, leave alone advanced instrument. The situation is more acute in rural areas.

In the Union Budget 2017-18, the total health budget is increased to INR 48,878 CR (2.27% of total Union Budget), from INR 39,879 CR (1.97% of total Union Budget), till now. Though the increase is good, the industry wished it to be a tad bit higher. Moreover, most of the capital is targeted towards human resources and medical education.

A positive step is the harmonization of policies and rules for the medical devices industry in order to add an impetus to local manufacturing and move towards improving affordability for patients, though no specific announcement was made on changing the import duty structure in this sector. Additionally, the Government has announced that it will be modifying the Drugs and Cosmetics Act to promote the use of generic medicine and reduce the cost of medicines available in the market.

In terms of infrastructure, the government proposed the set up of two new All India Institute of Medical Sciences (AIIMS) in the states of Gujarat and Jharkhand. This is surely a good move and implementing it quickly and staffing it with good quality resources will go a long way in guaranteeing access to affordable quality healthcare in the states.

The Government also proposed to restructure medical education and add 5000 post graduate seats for specialist courses. The Finance Minister has decided to start DNB (Diplomate National Board) courses throughout the district and municipality hospitals across the country.

Some of the Government initiatives are immensely ambitious and needs to be supported properly by well-rounded strategies and initiatives. Additionally, no announcements were made toward combating Non Communicable Diseases which are likely to constitute a whopping 75% of diseases in the future.

One of the best schemes introduced last year, the National Health Protection Scheme is yet to be implemented and is waiting for a cabinet approval. The budget allocation for the scheme has been reduced this year which could have been avoided. Also, some impetus including exemptions should have been provided to boost up the demand for health insurance policies and products. However, that also hasn’t been done.

Overall, the budget was quite conducive for the healthcare sector and addresses some key concern areas. What is now needed pertains to aggressive on-ground execution.