The Karnataka government on Friday (September 6, 2023) urged the Centre to reconsider the 18% Goods and Services Tax (GST) for the middle-income and low-income policyholders on health insurance.
In a letter to Prime Minister Narendra Modi on September 6, Karnataka’s Health Minister Dinesh Gundu Rao has urged him to recommend to the GST Council, which is due to meet on the September 9, 2024, to reconsider the 18% GST on health insurance. This will certainly be a positive step in achieving Universal Insurance in the year 2047, Mr. Rao said in the letter.
Highest bracket
Pointing out that the GST on health insurance is in one of the highest brackets of taxation at 18% and has been so since 2017, the Minister said: “This is despite several protests from all stakeholders, including politicians and policymakers across the board. A GST so high on what is an essential service/necessity, especially in a post-pandemic world, is draconian to say the least and definitely not what a welfare State should be doing.”
“A high rate of GST has a direct impact on the cost of premiums, which means that health insurance is now more expensive. The rising cost, while not discernible to the upper economic classes, has a cataclysmic effect on economically weaker sections to whom even a marginal increase in the premium makes it inaccessible to purchase. So, in that circumstance, they choose to either forgo another necessity to afford the premiums or, more often than not, avoid getting health insurance at all, which leaves them and their family exposed to a medical emergency which may leave them in severe financial distress,” the letter stated.?
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Essential for well-being
“While the rationale for such a high GST has never been explained, as the Health Minister in one of the States which is a pioneer in medical education and infrastructure, I see the positive impact of our cashless State health insurance scheme along with the added protection of purchased health insurance which acts as a buffer in case of larger emergencies. This two-step coverage system is essential to the wellbeing of our citizenry,” he said in the letter..?
The Minister also apprised the Prime Minister of Karnataka launching Arogya Karnataka in 2018 — even before the Centre’s Ayushman Bharat Scheme — to offer health coverage to people in Karnataka.
“While it is true that the government has worked tirelessly to ensure affordable and accessible healthcare to all its people, health insurance is a necessary precaution to provide coverage in case of medical emergencies and also specialised hospitalisation outside the scope of the services offered by the government,” Mr. Rao said in the letter.
The Minister pointed out that the Union Government has even expressed the importance of such insurance by launching a nationwide mission to ensure “Universal Insurance Coverage by 2047”.
“The changing unpredictability of the human condition, environmental factors and a new generation of vectors has made health insurance inevitable to protect against unforeseen circumstances. Which is why it is not only unfortunate but also ironic that a government which espouses the vision of Universal Insurance also taxes it at a rate so high, that it disincentives health insurance altogether,” he wrote.?
Published - September 06, 2024 03:00 pm IST
