The Union government’s proposed a 5 per cent service tax on health care in the Union budget for 2011-12 will push up the medical expenses of all patients in the country. The cost of the heart surgery which is currently Rs.1 lakh will now go up by Rs.5,000. In the case of cancer surgery, followed by radiotherapy and chemotherapy, a patient should be prepared to shell out an extra Rs.20,000.

It is estimated that less than 10 per cent of Indian population can afford heart, brain or cancer surgery. Criticizing the government move, Dr Devi Shetty, managing director, Narayana Hrudayalaya stated, “This is not ‘Service Tax,’ it is a ‘Misery Tax’ since the government wants to make money out a patient’s misery,”

Dr Shetty has asked the healthcare providers and patients to observe March 12 as ‘Misery Day’ and be present near the Karnataka Governor, Hans Raj Bhardwaj’s residence to present the petition titled ‘Axe the Health Tax’ calling to roll back the proposed Service Tax where all levies for diagnostic, and payment by insurance companies can be abolished along with withdrawal of central sales tax, custom duty, VAT on health sector for at least for ten years till all citizens have access to affordable health care.

The budget has proposed that air conditioned hospitals need to pay tax. No surgery, simple or complex, can be performed without an air-conditioned Operation Theatre. Legally, a blood bank cannot get license without air-conditioning. CT, MRI and Catheterization labs do not also function without air-conditioning. Even checks ups coming under preventive healthcare, will see people shelling out an additional Rs.500, he added.

“Our Government does not have the moral right to tax health care. It spends less than 1 per cent of the GDP on this sector. The only other Asian country which spends less than India is Pakistan. Even the Governments of sub-Saharan Africa spend more for health care than us. In fact, 80 per cent of the health care cost in India is paid out of your pocket with hard earned money.

Today, almost 90 per cent of those in need of tertiary treatment die a slow and painful death because they cannot afford surgical treatment. The remaining 10 per cent, who can afford end up spending a better part of their life's savings for treatment. Even poor villagers who pay Rs.5 to Rs.10 per month for micro-health insurance must pay 10 per cent service tax which makes it unaffordable. Health care cost is the commonest reason for the rural indebtedness. One sick person in the family can bring them down below- poverty-line perpetually, pointed out Dr Shetty.

The key factors contributing to the high cost of healthcare in India are high tax component. Hospitals pay central sales tax, custom duty, luxury tax, entry tax, VAT, excise duty and electricity bills at the highest tariff levels. Approximately, 25 per cent of the construction cost of the hospital goes to the Government in some form of tax. “With all these prevailing Government taxes, how can the hospitals provide affordable health care,” he queried.