“Misery tax” is off, following vociferous opposition from the country's leading healthcare representatives, including Dr Devi Shetty of Narayana Hrudayalaya, Dr Prathap Reddy of Apollo Hospitals and Dr Naresh Trehan of Medanta. And it is the consumer who can now heave a sigh of relief.

If it were not for the vocal protests against the service tax on air-conditioned hospitals (with over 25 beds) and diagnostic centres, starting April, the consumer would have had to fork out that additional amount every time he or she undertook a medical test or investigation at a reputed centre.

The Union Finance Minister, Mr Pranab Mukherjee's proposal in Budget 2011 to introduce a service tax of about 5 per cent was to set right the anomaly between those covered by health insurance and those who pay for their healthcare expenses. But the proposal ran foul since it hurt the consumer, resulting in the roll-back of the proposal on Tuesday.

“This is going to make a big impact on the aam aadmi . I am a happy man today,” said Dr Devi Shetty. The man who called it ‘misery tax', and amassed people in Bangalore to oppose it, said if the tax had been passed, it would have made critical surgeries very difficult for the commoner.

“As much as 47 per cent of rural people borrow money or sell their homes and assets to pay their surgery bills. They would have paid Rs 8,000-20,000 more per heart surgery; and Rs 1.5 lakh to Rs 2 lakh more for a bone marrow transplant [that costs around Rs 20 lakh],” he said.

Health insurance

How would hospitals chip in now to make healthcare affordable? Dr Shetty said there were various other taxes on the sector. “We want some incentives so that a lot more hospitals can be opened in the North-East” and regions that lack healthcare facilities.

Also, the government, he said, needed to roll out health insurance for the masses across the country, as some States had already done. Under Yashaswini in Karnataka, a person paid Rs 10 a month and a bypass, for example, came down 30-40 per cent to Rs 60,000. Narayana had conducted 800 surgeries under this scheme. Andhra Pradesh and Tamil Nadu also had similar schemes, Dr Shetty said.

Dr Nagendra Swamy, President of Manipal Health Enterprises, added that preventive health will now get a boost as taxing laboratories would have been detrimental. “With economy, healthcare, too, should improve.”

With the Centre not giving sops to healthcare, it should not have further taxed the sector, observed Dr Vivek Desai, heading the Confederation of Indian Industry's regional healthcare division. Air-conditioning is a basic requirement, and not a luxury, he added.

Besides benefiting the common man and boosting the industry, the roll-back signals the Government's intent to help make healthcare more affordable, said Mr Shivinder M Singh of Fortis Healthcare.

(with inputs from Thomas K.Thomas, New Delhi)