Budget 2023: Time to strengthen healthcare infra, increase fund allocation

Even as the Union Finance Minister Nirmala Sitharaman is making all preparations to present the Union Budget for the financial year 2023-24, Nathealth - Healthcare Federation of India has recommended to the central government to enhance healthcare infrastructure and universal health coverage as part of budget recommendations. Nathealth, established in 2012 with an objective to bring together healthcare stakeholders in India and work along with policy makers to create an environment that will power the next wave of healthcare for all, also emphasized that the budget allocation for health should be substantially increased to 2.5 per cent of GDP in line with the government's own stated intent to spend 2.5 per cent of GDP on healthcare by 2025.

The Federation has submitted a comprehensive set of recommendations to the Union Finance Ministry for the Union Budget 2023-24 to address the current barriers for the private healthcare sector in the country. In its recommendation, Nathealth has asked for rationalization of Goods and Services Tax (GST) for the healthcare sector in the country. Unlike in other sectors, the healthcare sector has not been able to derive the benefits of the GST transition. In fact, the embedded taxes in the healthcare sector have increased in the post-GST regime compared to pre-GST scenarios. Based on the results of the study of the embedded taxes, Nathealth has proposed to the government two options like imposition of a 5 per cent GST merit rate at the output healthcare services for all healthcare establishments (both private and government) with the option to claim full input tax credits, levying a 5 per cent GST rate on output services for all private hospitals and an optional dual rate structure for government healthcare establishments.

Apart from seeking simplification of various processes to enhance ease of doing business, Nathealth has also urged the government to strengthen healthcare infrastructure across tier-2 and tier-3 cities, investing in emergency healthcare delivery services and expanding testing infrastructure in the hinterland by accelerating capex spends. In the short term recommendations submitted to the government, Nathealth has highlighted the need of enhancing the role of the private sector in increasing capacities of the healthcare professionals to address the shortage of healthcare professionals. Other major recommendation of the Nathealth included unutilized past MAT credit while transitioning to the new Income Tax regime. As per the existing direct tax regime, MAT credit entitlement is available for healthcare players who had embarked on greenfield capacity expansion. Availability of the credit has meant they are unable to transition to the reduced corporate tax regime of 25 per cent as announced by the Union Finance Minister earlier, which would be available for companies which do not have un-utilized MAT credit in their books. Till such time the MAT credit is utilized, companies that have invested in hospital infrastructure would be under the existing corporate tax regime of 34.94 per cent. This deprives the companies who paid MAT in good faith, the benefit of setting off the credit against the new tax regime.

Further, it has strongly recommended for clearance of working capital arrears both for providers and procurement organisations and health financing. Increasing coverage of insurance particularly in tier-2 to tier-3 towns will drive capacity growth as high-quality providers will have confidence in the paying capacity of the patients. Around 48 per cent of the population travels 100 km to access healthcare, there are opportunities to build asset-light models powered by digital technologies improving access and affordability with appropriate reimbursement and financing models. Highlighting the need for budgetary allocation for clearing past dues under CGHS and ECHS, Nathealth stated that it is painful that reimbursements for completed treatments under these schemes are not made on time, and in most cases, remain unpaid even for 2-3 years (in some cases even up to 6 years), causing severe stress on working capital and cash flows for private healthcare providers. In this regard, the Federation has recommended to the government to consider a one-time, accelerated budgetary allocation for clearing past dues under CGHS and ECHS (up to an ageing of 90 days) in the forthcoming budget. Private healthcare providers will extend fullest cooperation in ensuring that all claim details are made transparent and available, and a one-time resolution is seamlessly completed. Speaking about the recommendations, Dr Shravan Subramanyam, president, Nathealth, said: "It is imperative to build infrastructural capabilities so that people have greater access to quality and critical healthcare services. Viability gap funding by the government is essential to set up hospitals in tier-1 and tier-2 cities, encouraging increased investment in the healthcare infrastructure". Dr Ashutosh Raghuvanshi, senior vice president, Nathealth and MD & CEO, Fortis Healthcare, said, "India is amongst the most preferred destinations globally for medical tourism and therefore, increased policy support is required to encourage, facilitate medical value travel to India, develop MVT as an organized sector".

(The author is a freelance journalist with varied experience in different fields)