Finance ministry and health ministry need to ensure that people get affordable quality healthcare
A service tax on health check-ups and diagnostic tests and on hospitals with central air-conditioning and over 25 beds is just the kind of proposal that would trigger evasion strategies rather than compliance. Fortunately, a day after the Budget, the finance secretary has already hinted at a rollback. But the bigger issue is whether the finance ministry is oblivious to the problem of galloping healthcare costs (20% annually, according to an ICICI Lombard study) and the consequent face-off between 5-star hospitals in metros and the public sector insurers who had stopped providing cashless medical treatment in the more expensive hospitals. Instead of extracting a service tax, we need the finance ministry and the ministry of health to ensure that middle-class Indians have access to affordable quality healthcare.
One way is to compare and contrast 5-star hotels with 5-star hospitals. Even the most expensive 5-star hotels bill all guests the same charges for common facilities such as restaurants, spas, salons and health clubs. The price difference is only in the price and quality of the room that you opt for. Not so with hospitals. In our 5-star hospitals, the rates balloon upwards depending on whether you opt for a general ward, a twin-sharing or a separate room or a deluxe facility. Hospitals have an elaborate grid of charges (operating theatre, diagnostic tests, visits by doctors and specialists, etc) that escalate according to the facility chosen by a patient. And this when the room rates already rival those of quality hotels. It is the health ministry’s job to regulate this rapacious pricing; but it did nothing since insurance companies were picking up the tab in most cases. Instead of focusing on extracting more revenue from taxpayers, the government needs to frame regulations to ensure that quality healthcare remains affordable in our cities.
(This report was first published in Moneylife magazine, in the edition dated 24 March 2011, that was available on the newsstands on 10 March 2011)