Pranab wants to make money off the sick

Doctors shocked, surprised over service tax on 25-bed ac hospitals


Sonal Matharu | March 1, 2011

After the budget 2011-12, falling sick has become an even costlier proposition.

For example, centrally air-conditioned hospitals with over 25 beds will now charge a five percent service tax from the patients on all services provided. This move has elicited strong reactions from the medical fraternity. Doctors are concerned with the treatment cost going up which will directly hit not only the poor patients, but also the middle-income households.

“This is the first time in the country that such an arbitrary rule has come up. This shows how the healthcare has been looked at in the budget. The government is making revenue on the suffering of the patients. This five percent service tax will push the healthcare cost up by a minimum of 10 to 15 percent,” said Dr Vinay Aggarwal, president, Indian Medical Association (IMA).

The conditions like 25 beds and air-conditioning are an eyewash, he said, as the government doesn’t give permission to open hospitals which have less than 25 bed strength and which don’t have air-conditioning. A hospital needs air-conditioning, at least in the operation theatre.

“Have you ever heard of a non air-conditioned hospital? Working in a non air-conditioned hospital means inviting infection. Hospitals are not charged service tax anywhere in the world,” said P N Arora, managing director of Yashodha Hospital.

He added that the government indirectly collects taxes from the people for healthcare, education and infrastructure. It is liable to provide healthcare to its citizens. “When a patient goes to a public hospital he is thrown out because of lack of facilities and overcrowding. With this new policy, if he or she seeks treatment from a private hospital and pays everything out of pocket, the government wants a share in that too. The fact that a patient has to seek treatment from a private hospital in itself is a government failure,” added Arora.

The new rule not only brings the hospitals under the tax ambit, it even ropes in small nursing homes and diagnostic centres.

“Even for a Rs 100 diagnostic test, the patient will have to pay tax. The government is just increasing the pressure on the patients. This is simply a mockery of the system. I think the finance minister was sleeping when he made this policy,” said Arora.

In the government hospitals too patients are asked to get diagnostics from private labs, added Dr Aggarwal. “This is not a way towards better governance. Even in developing countries, government gives subsidies to open hospitals and diagnostic centres but in India, they are taxing patients.”

Patients who paid hospitals through insurance companies were, till date, supposed to pay service tax. But with the new rule, those who pay out-of-pocket will also be liable to pay service tax. In India, almost 75 percent of total expenditure on healthcare is out-of-pocket, according to the World Health Organisation (WHO).

The government seems to have completely overlooked the concerns raised by the civil society on the high cost of healthcare in the country. The National Sample Survey Organisation (NSSO) in its 60th round mentioned that 6.2 percent of the total households in the country fell below the poverty line as a result of healthcare expenditure in 2004, mentioned the Centre for Budget and Governance Accountability (CBGA) in its six-point programme it prepared on healthcare in India. 

“Such a rise in healthcare cost is unjustified. In India, the health seeking behavior is mainly private. We have to wait and watch the reaction from the medical fraternity for any rollbacks on the policy. The medical cost is going to increase in future. These steps from the government, I feel, are just to encourage people to buy health insurance. We are going the US way,” said Dr Paras Agarwal from the department of community medicine, Guru Teg Bahadur hospital.

The National Health Accounts 2008-09 show that 26.7 percent of healthcare expenditure was public and 71.6 percent was private.
Meanwhile, the IMA has collaborated with other professional organisations and written to the prime minister to rollback the obnoxious policy.

“In government hospitals, the patients are lying on the floor because the government hospitals cannot refuse treatment to patients and at the same time they do not have infrastructure to treat all patients. For the poor, there is no option now but to die,” said Arora.





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