How GST pushes healthcare costs and squeezes India’s middle-class

For the vast middle class of India, navigating the labyrinthine alleys of healthcare has become an increasingly daunting task. Once considered a bastion of relative financial security, this crucial demographic now finds itself caught in a tightening vice of rising healthcare costs, fueled in part by the implementation of the Goods and Services Tax (GST).

While GST promised a streamlined taxation system, its application to healthcare has thrown a wrench into the middle class’s financial well-being. Prosthetic limbs, pacemakers, and other life-altering implants, previously exempt, now bear the sting of a 5% GST, pushing their cost beyond the reach of many families. Even vital medicines for chronic conditions like diabetes and heart disease fall under this bracket, adding a bitter pill to their monthly healthcare burden.

The impact ripples beyond tangible prices. Hospitals, exempt from most service taxes themselves, face a hidden tax burden on equipment, linen, and other consumables. This inevitably translates to higher room charges and bills, squeezing the already-thin wallets of middle-class patients. Outpatient care isn’t spared either. Private clinics, grappling with the cascading effect of GST on supplies and equipment, have no choice but to hike consultation and procedure fees, further eroding the middle class’s access to routine healthcare and preventive checkups.

The statistics paint a grim picture. Pre-GST, healthcare expenditure gnawed at about 5.6% of the average Indian household’s income. Post-GST, that figure has ballooned by 10-15%, according to a 2019 AIIMS report. This isn’t just a number; it represents families forced to delay or forego critical treatments, accumulating crippling medical debt, and sacrificing preventive care for immediate financial survival. The consequences can be disastrous, potentially leading to worse health outcomes down the line. The squeezed middle class, the backbone of India’s healthcare system, cannot continue to suffocate. Solutions are urgently needed to alleviate their plight.

Expanding the list of medical devices and drugs exempt from GST, lowering tax rates on essential healthcare services and products, introducing tighter price controls, and increasing government spending on healthcare are all potential tools in this battle.

Providing affordable and equitable health care to everyone, not just the wealthy, is not only a moral imperative but also an economic necessity. A healthy middle class creates a healthy economy. Ignoring its cries for help can only lead to a sicker, more fragile India.

So, let us listen closely, understand the nuances of their struggle, and work towards a healthcare system that doesn’t squeeze life out of its very bedrock – the middle class.

Tax(GST ) aimed to streamline India’s complex taxation system, its application to healthcare has sparked debate, particularly concerning its impact on the middle class, the backbone of the healthcare consumer base.

Let’s delve into the specifics and understand how GST stings:

For the vast middle class of India, navigating the labyrinthine alleys of healthcare has become an increasingly daunting task.

Once considered a bastion of relative financial security, this crucial demographic now finds itself caught in a tightening vice of rising healthcare costs, fueled in part by the implementation of the Goods and Services Tax (GST).

This inevitably translates to higher room charges and bills, squeezing the already-thin wallets of middle-class patients.

Outpatient care isn’t spared either.

Private clinics, grappling with the cascading effect of GST on supplies and equipment, have no choice but to hike consultation and procedure fees, further eroding the middle class’s access to routine healthcare and preventive checkups.

The Statistics paint a grim picture.

Pre-GST, healthcare expenditure gnawed at about 5.6% of the average Indian household’s income.

Post-GST, that figure has ballooned by 10-15%, according to a 2019 AIIMS report. This isn’t just a number; it represents families forced to delay or forego critical treatments, accumulating crippling medical debt, and sacrificing preventive care for immediate financial survival.

The consequences can be disastrous, potentially leading to worse health outcomes down the line.

The squeezed middle class, the backbone of India’s healthcare system, cannot continue to suffocate.

Solutions are urgently needed to alleviate their plight.

Expanding the list of medical devices and drugs exempt from GST, lowering tax rates on essential healthcare services and products, introducing tighter price controls, and increasing government spending on healthcare are all potential tools in this battle.

Providing affordable and equitable health care to everyone, not just the wealthy, is not only a moral imperative but also an economic necessity.

A healthy middle class creates a healthy economy. Ignoring its cries for help can only lead to a sicker, more fragile India.

So, let us listen closely, understand the nuances of their struggle, and work towards a healthcare system that doesn’t squeeze life out of its very bedrock – the middle class.

Increased costs
A) Medical devices and implants :
Prosthetic limbs, pacemakers, and other vital implants, previously exempt, now attract a 5% GST. This can inflate treatment costs by thousands, pushing them beyond the reach of many middle-class families.

B) Medicines :
Specific categories of drugs, especially those for chronic conditions like diabetes and heart disease, now fall under the 5% GST bracket. While essential medicines remain exempt, the additional tax on even a portion of medications adds to the monthly healthcare burden.

C) Diagnostics and testings :
Certain diagnostic tests and imaging procedures like MRIs have seen a price hike due to the 5% GST levied on equipment and consumables. This makes early detection and timely intervention, crucial for managing chronic conditions, costlier.

Indirect burdens
A) Hospitalization expenses :
Hospitals, though exempt from most service taxes, face increased costs due to GST on equipment, linen, and other consumables. This translates to higher room charges and overall hospitalization bills, impacting middle-class budgets.

B) Outpatient care :
The cost of consultations and outpatient procedures at private clinics has also risen due to the cascading effect of GST on supplies and equipment. This makes routine healthcare and preventive checkups less accessible for the middle class.

Beyond the numbers
These statistics paint a concerning picture, but the true impact goes beyond numbers. The increased financial burden:

Forces families to delay or forego essential treatments, compromising their health.

Increased dependence on credit and medical debt, which increases financial stress.

It may interfere with preventative treatment, potentially leading to worse long-term health effects.

##Possible solution##
A) Expand the list of healthcare products and medicines exempt from VAT.

B) GST rates will be reduced for certain categories of healthcare services and products.

C) Introduce stricter price controls on essential and diagnostic medicines. Increase government spending on health care to ease the burden on private consumers.

Conclusion
The complex relationship between GST and healthcare requires careful analysis and proactive solutions. While streamlining certain aspects, GST has undoubtedly restricted middle-class access to critical healthcare services.

Addressing these issues is critical to ensuring affordable and equitable health care for everyone in INDIA. Medium