Finance minister Pranab Mukherjee on Tuesday announced a rollback of the five percent service tax on healthcare which was proposed in this year’s budget.

The budget had proposed that a five percent service tax will be charged on the services offered by private, centrally air-conditioned hospitals with more than 25 beds strength and on all diagnostic centres. The healthcare sector was up in arms against this tax which many said would burn a deeper hole in the pockets of the sick.

The doctors who vigorously spoke against the obnoxious step by the government to tax the sick are overwhelmed by the unity shown by the entire medical fraternity in convincing the government not to go ahead with the implementation of the tax.
 
India is heavily dependent on the private sector for healthcare with almost 80 percent of the needs met by the private hospitals. With less than one percent insurance coverage in India, most of the expenses on medical treatments incurred by the people are out-of-pocket.

The five percent service tax would have been added in the medical bills of the patients who would go to a private hospital not out of choice but out of need, given the crippling public health infrastructure in the country. The patient would have had to shell out more for even a simple medical procedure or diagnostic as hospitals and diagnostic centres cannot operate without air-conditioning.

Civil society has been making noise for long about the long neglected issues of healthcare like the meager public spending on health and quality concerns at private hospitals, including the corporate hospitals.

Instead of regulating the unorganised public and private hospitals and other clinical establishments, the government decided to make money out of a patient’s misery. Expensive medical treatments are already unaffordable for many and the new tax would have further shot up the healthcare expenditure.

If the idea was to tax the corporate hospitals in India, it should have been clearly spelt out. There should be regular checks to make sure the free beds the private hospitals are obliged to provide to poor patients are occupied and that the hospitals do not refuse treatment to those who cannot pay. The government should also stop handing over land to corporate hospitals at highly subsidised prices as these hospitals, once ready, run like any money-making business entity and make huge profits.

However, the government cannot ignore the distressed migration to the private healthcare sector in India. Keeping the larger interest of the sick who seek treatment at private hospitals, it’s a great relief for all that the tax has been rolled back.