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11th Plan approach paper moots tax on pvt hospitals in Kerala
September, 15th 2006
Proposal to mobilise resources for public healthcare system -------------------------------------------------------------------------------- The total healthcare expenditure consists of three components - consultation cost, diagnostic cost and drug cost. The largest is the diagnostic cost, which varies significantly across institutions. -------------------------------------------------------------------------------- A proposal to tax private hospitals has been made as part of the efforts to mobilise resources for the public healthcare system in Kerala. The approach paper for the Eleventh Five-Year Plan in the State says this could be one of the ways to overcome the paucity of funds on the part of the Government to strengthen the public healthcare system. The paper notes that the private sector dominates curative healthcare in the State. But it is more oriented towards super-speciality hospitals, which are expensive and not intended to cater to the poor. There has been a suggestion to raise user charges in government hospitals to solve the problems arsing from the paucity of resources for strengthening the public healthcare system. But this will impinge more on the poorer sections of the population, as the rich will more or less exclude themselves from the public system. Another suggestion has been to go in for a system of vouchers with the Government reimbursing needy patients for their treatment in private hospitals. But this will amount to the Government subsidising the expensive private healthcare, says the paper. In such a scenario, taxing of private hospitals is a better way of mobilising funds for the public healthcare system. Even so, there is need for some degree of social regulation of private healthcare charges, according to the paper. The total healthcare expenditure consists of three components - consultation cost, diagnostic cost and drug cost. The largest of these components is the diagnostic cost, which varies significantly across institutions. This needs to be regulated and made more uniform. Similarly, drug costs could be restrained through community pharmacies as being run in medical colleges. The paper observes that a remarkable feature of the public healthcare system in the State is the blending of different streams of medicine such as ayurveda and allopathy. This will, to some extent, help in overcoming the problem of shortage of doctors. The ayurvedic system, however, needs to be streamlined with systematic professional research instead of individual research of a few practitioners. Since the strengthening of the ayurvedic system will have positive impact on sectors such as tourism and social forestry, the Government can fund such research, says the paper.
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