Two years back, 22-year-old Minakshi Shetey purchased a two-year health insurance policy of Rs 5 lakh for herself, for which she paid a premium of Rs 10,000. This year, however, she was asked to pay close to Rs 15000 for a new policy. Given the rise in premium, Shetey thought it was better to opt out of the policy altogether than to pay the "high premium."
"I was advised by my mother to have a health insurance policy handy for if ever the need arises, I wouldn't be burdened with high expenses. But now I feel I'll take my chances rather than cough out heavy premiums for health insurance policies," she says.
For Sharda Singh, a tuberculosis patient and mother of four who works as a house maid in Mumbai, opting for health insurance has become even more challenging now. Singh's predicament sheds a light on the staggering financial burden faced by TB patients in India.
Earlier this year, researchers from the George Institute for Global Health India in collaboration with researchers from Indira Gandhi Government Medical College (Nagpur), and the London School of Hygiene and Tropical Medicine (UK) conducted a survey of 1,482 TB patients across four states and it revealed shockingly high rates of catastrophic costs, with 30 to 61 per cent experiencing financial hardship during the long TB treatment. The study advocated for the reimbursement of pre-treatment expenses through health insurance, emphasising the need for improved coverage and utilisation.
This year, post budget 2024, insurance companies have increased the premiums on health and life insurance policies which, when clubbed with the 18 per cent GST (Goods and services tax), makes it less affordable for many. In this regard, Rahul Gandhi, Leader of Opposition in Lok Sabha, held a protest outside the Parliament on Tuesday, demanding the withdrawal of GST on life insurance and health insurance premiums. A day prior to Gandhi's protest, Trinamool Congress MP Derek O'Brien had also raised the issue in Rajya Sabha and a week before that his party chief Mamta Banerjee had threatened to take to the streets in protest against what she termed as the 'anti-people tax.' As the Union minister of Road Transport and Highways put it, this GST on life and medical insurance amounts to 'taxing the uncertainties of life.'
On Monday, the government acknowledged in Parliament that representations had been received asking for an exemption or reduction in the rate of GST on life and health insurance. The argument for levying the GST on insurance policies, as per the government, is that insurance is a service and is a revenue earning segment for the government. As per data, GST on all insurance policies fetched the government Rs 21,256 crore in the last three financial years.
However, a few from civil society organisations and NGOs are asking the question - if the government does agree to reduce GST on insurance policies, will insurance companies pass on the benefit to policyholders, given that the rise in retail inflation has already added to their overall costs? Already, argue experts, Indians are lax when it comes to purchasing health insurance policies, and now with high premium burdens resulting from high rate of GST, frequent premium hikes and medical inflation the numbers are only set to dwindle sharply.
In February 2024, the Standing Committee on Finance endorsed insurance regulator IRDAI's goal, 'Insurance for all by 2047,' but with the GST on insurance in India continuing to be the highest in the world (there is no tax on insurance in countries like Singapore and HongKong), it remains doubtful if the goal set by the IRDAI can be achieved at all.
