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Swacch Bharat to Swasth Bharat – The impact of Union Budget 2018 on Health Insurance Industry.



The Health Insurance Budget 2018 promises to create the largest healthcare blanket for the biggest democracy in the world. Union Budget 2018 was a landmark budget for the insurance industry as it sees the government changing its stance from being a regulator to a strategic buyer.


Many announcements were made which are set to impact the whole sector as well as its stakeholders. Let us take a look at some of the main announcements of the Health Insurance Budget 2018 and their likely impact.


The Ayushman Bharat Scheme a.k.a Modicare


The Ayushman Bharat or the National Health Protection Scheme (NPHS) is the crowning jewel of the Health Insurance Budget 2018. This scheme promises to offer Rs.5 lakhs cover for 10 crore families for secondary and tertiary treatment. Insurance needs more penetration in rural India and with Modicare, rural India can finally reap the benefits of an insurance cover. However, such a scale of penetration will require near flawless implementation. Traditionally, the Indian government has taken the public-private partnership route for schemes requiring mass implementation. This time, it should be no different which opens up a huge opportunity for private players to create a name for themselves among the underserved.


Section 80(D) Exemption Limit


In this healthcare budget of 2018, the government has increased the exemption for payments towards health insurance premiums from Rs.30000 to Rs.50000. This, however, is only applicable to insurance bought by/for senior citizens. This increase in exemption was much needed keeping in mind the rising cost of health insurance premiums for the elderly.


ULIPs vs Mutual Funds


The government has now levied a long-term capital gains tax on mutual funds as well as ELSS. Investors who till date enjoyed tax-free returns on mutual fund investments may now opt for ULIPs instead for tax saving. Another big development is the reduction in health insurance premium payment for senior citizens which will surely make the higher medical coverage a lucrative option.


The Merger of Public Sector Giants


Finally, the merger of the three public sector insurance firms announced in the Insurance Budget 2018 will surely decrease the competition. The market will benefit from the economies of scale that the merger achieves and the profitability of the industry, in general, should go up.


The Budget of 2018 promises to be a revolution for the insurance industry. Many are already calling this the Insurance Budget 2018. The NPHS scheme if implemented well, will bring almost 40% of India’s population under a national protection plan. The largest universal coverage. Although the policies drafted by the government is commendable, the success will depend on tightening the entire value chain of insurance agencies, health care providers, TPA’s, primary health centers, diagnostic companies and medical practitioners amongst others.

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