NEW DELHI: The healthcare industry, along with the international consultancy firm, KPMG has suggested introducing centralised health savings accounts (HSA), on the lines of public provident fund, with an aim to bring a major part of the Indian population under the ambit of health insurance.
The joint report titled “Health Savings accounts in India” by the Federation of Indian Chambers and Industry and KPMG also recommends that the health savings account can be managed by a government nominated body or privately managed by insurers with centralised fund management.
Such a model is widely followed in the USA, Singapore and South Africa and the move, along with a high deductible catastrophic insurance policy has led to reduction of overall healthcare expenditure by 5-7 per cent.
The Indian healthcare industry is driven by out of pocket expenditure at 62 per cent of the entire expenditure and health cover is provided to only 27 percent of the population while remaining 73 per cent is still uninsured.
The report says that the “HSA should be linked to a high deductible health insurance cover, which will allow for end-to-end coverage of healthcare needs”. This, in turn could be the catalyst to bring a major part of the population under the ambit of health insurance, it notes.
The report takes also mentions that health insurance offerings in India are geared towards indemnity schemes providing coverage for hospitalisation expenses, there are limited options for coverage of expenses like outpatient department, diagnostics and medicines.
“Healthcare costs today are going up by the day due to lifestyle diseases in particular and the only way the gap between rising healthcare costs and affordability can be bridged is if the insurance sector develops a sustainable and viable mechanism," Antony Jacob, co-chair, FICCI health insurance Committee and chief executive officer and whole time director, Apollo Munich Health insurance said.
"The concept of a HSA could, therefore, prove to be a viable option for creating a corpus for meeting future healthcare needs. This will ensure that more and more people have funds for accessing healthcare services, thereby going a long way in realising India's goal of providing healthcare to all," Shashwat Sharma, partner and head, Insurance, KPMG in India said.
The report suggests that the government should enable tax breaks for payroll-based as well as individual contributions to the HSA fund to be used exclusively for meeting healthcare expenditure. “The same can be considered as taxable income in case of withdrawal for non-healthcare requirements,” it recommends.