The issue of reducing the Goods and Services Tax generally focusing on health insurance has created a lot of debate among those in the policy making and those in the industry. While such a decision is, no doubt, very noble since it would bring down the price of health insurance thereby enabling millions of Indians to afford health insurance, a government insider has, however, cautioned that it could also cost the government a lot of revenue, as much as Rupees three thousand five hundred crore every year without fail.
The Push for GST Relief
Health insurance is vital for all persons and families especially in a country such as India which is known for high out of the pocket health care costs. At the moment, health insurance policies attracted 18 percent GST which is currently applicable on goods and services in India. This adds to the total cost, and in some instances, makes people cut down on the amount of coverage they would otherwise have bought.
Possible Impact on Revenues
Nonetheless, both removing health insurance from the GST and lowering the rate would have costs on the government, which would lose tax revenues previously obtained from the companies offering this service. According to a senior government official, there is an estimated loss of revenues of about ₹3.5 billion every year from the health insurance GST cuts. This illustrates why such issues remain critical to policymakers: fitting health insurance within the reach of more people without compromising on the coffers that fill up to fund public services and infrastructure.
The official said that while it is important to strive to increase the uptake of health insurance, they have to work within the constraints of the revenue generated from GST.
Reconciling Revenue Generation and Affordability
Disputes about the relevance of the health insurance GST can be attributed to an emerging problem in public policy concerning taxation, which is the generation of revenue without necessarily making essential goods or services expensive beyond the reach of the consumers. Lowering the GST on health insurance may at the same time also improve its adoption and minimize the financial burden on individuals caused by the high medical expenses. This also has the possibility of reducing the degree to which the health care service is relied on, and hence reducing some strain on the healthcare budget from the government.
Working Options
With confidence that these concerns may be addressed through some measures, some doctors recommend other alternatives that include subsidizing only health insurance or given GST exemption depending on income levels. It These steps would enable low income groups to be able to afford it for health insurance without putting a big strain on the government.
Another alternative could be a graded cut on GST only on certain types of insurance, such as health insurance policies for the elderly or people suffering from terminal illnesses. This would ensure that the cover would be effective while controls on how much revenue loss would be experienced were implemented.
Outcomes
It is really a hard choice that policymakers should confront regarding a possible revenue loss of ₹3,500 crore if relief to GST on health insurance is granted. It is unquestionable that these policies aim for proper health coverage, which is very much needed; nevertheless, it should be balanced with the expenses on the state. As the dialogue goes on, addressing this intricate issue will depend on how well people advocate for a middle ground that results in good health outcomes without burdening the government.
