Like all essential commodities, the cost of health insurance premiums has also skyrocketed with over 100 per cent increase since October 1.
Many insurance companies have claimed that the insurance regulator, Insurance Regulatory and Development Authority of India’s (IRDAI), guidelines have mandated product enhancement leading to the increase in the cost of the premiums.
Besides, the government has kept the health insurance in the highest tax bracket which only luxury or non-essential products or services attract. For instance, a hotel room with 7501 tariffs attracts 18 per cent GST.
Health and finance experts argue that medical insurance has emerged one of the basic products during the pandemic and government should not make money out of people miseries.
“However, small may be the section of the population who can afford private insurance and who shall inevitably seek care from the big corporate hospitals for Covid were they to contract the infection, but this is a section which serves as an assured source of revenue,” Dr Vikas Bajpai, Assistant Professor, Centre of Social Medicine and Community Health, Jawaharlal Nehru University.
He adds, “The government on its part seems to have decided to absolve itself of any qualms of conscience in trying to make an extra buck from peoples' miseries.”
A very small percentage of the population can afford health insurance in India. As per the NSSO 'Social Consumption in India: Health' survey conducted between July 2017 to June 2018, 79.5 per cent and 83.7 per cent of Indian households in rural and urban areas respectively met the hospital treatment expenditure through household savings, while only in case of 3.2 per cent and 3.4 per cent of households in rural and urban areas respectively such expenditure was met from 'other sources' which included 'health insurance' but excluded 'borrowing', 'contributions from friends and relatives' and 'sale of physical assets.'
Dr Bajpai, who also represents Progressive Medicos and Scientist Forum (a group of socially committed doctors and scientists) further says, “The implication of levying 18 GST on health insurance ought to be evident from these figures given the fact that the private health sector is now the major player in dispensing both the inpatient and outpatient health care.”
Supreme Court lawyer Sachin Jain, whose public interest litigation is pending before the apex court for regulating hospital’s treatment and refusal of medical claims by the insurance companies, says that India, being a welfare state, should provide affordable healthcare especially in these unprecedented times of pandemic as part of the fundamental right to life guaranteed under Article 21 of the Constitution of India.
“Clearly these are not the times for the government to tax or earn revenue from the public health. Rather it is the time to subsidize the life-saving measures be it healthcare or the health cover,” Jain said.
Economist Dr Pralok Gupta says the reducing GST makes sense as only luxury and non-essential products attract 18 per cent GST.
“Even if the government is concerned about the loss of revenue due to decrease in GST rate, on the contrary, bringing health insurance in lower tax bracket might benefit the government by the way of enhanced penetration,” Dr Gupta said.
He is also of the view that as in developed countries, governments provide health insurance to its citizen, the least government in India should do is to put it under the lowest tax bracket.