Restore tax relief to people paying for their own health insurance

[Brendan Burgess]

This is an extract from my pre-Budget submission relating to health insurance

Dear Minister, this is what the taxpayer wants and deserves

• People should be encouraged to pay for their own private healthcare through a restoration of full tax relief on health insurance premiums.

And from my full submission:


Private hospitals and medical treatment should be encouraged and not penalised.

At present, a person who pays for private health insurance gets charged €800 a night for a stay in a public hospital bed, 10 times the rate charged for someone without health insurance. This scandalous charge should be scrapped immediately. You should encourage people to take out health insurance, not penalise them for doing so.

Full tax relief should be restored for private health insurance. If more people go to private hospitals, it will reduce the pressure on public hospitals.

Consultants should not be allowed to treat private patients in public hospitals. Every citizen should have a right to be treated in a public hospital, but they should not be allowed to be treated privately in a public hospital.

 

[Sarenco]

Why should the taxpayer subsidise the private health care market?

I happen to agree with you here - subsidised private health insurance and mortgage interest relief are just forms of middle class welfare. Personally, I would prefer lower taxes.

 

[Brendan Burgess]

Why should the taxpayer subsidise the private health care market?

Hi Shortie

The taxpayer pays almost 100% of the public health care market.

I can go to a public hospital and you will have to pay all my costs.

If I go to a private hospital, you would only have to pay half of my costs.

It would take pressure off the public hospital system.

But the real outrage is the €800 per night I am charged for the public hospital bed whereas someone without insurance is charged only €100 a night.

Brendan

 

[TheBigShort]

I can go to a public hospital and you will have to pay all my costs.

Not just me I hope! other taxpayers will contribute too.

If I go to a private hospital, you would only have to pay half of my costs.

If you go to a private hospital I'd rather not have to pay any of your costs. Your insurance cover should do that.

But the real outrage is the €800 per night I am charged for the public hospital bed whereas someone without insurance is charged only €100 a night.

I'm not denying there are seriously issues with the way treat people, but a restoration of tax reliefs is retrograde. It would also need to be costed, assuming in any given year the vast majority of policy holders don't actually use the hospital services, then this is costly and wasteful use of resources.

 

[Brendan Burgess]

The taxpayer pays almost 100% of the public health care market.

I can go to a public hospital and you will have to pay all my costs.

If I go to a private hospital, you would only have to pay half of my costs.

I have thought a bit more about this based on the comments.

Why should the state pay anyone's health care costs?

I have been treated a few times recently in public hospitals and paid a farcical amount. €100 if I remember correctly.

Why are people not charged the full amount for their care if they can afford to pay?

If they do this, then I would agree with getting rid of tax relief on medical care and medical insurance.

But if the state pays 100% of the costs for anyone in a public hospital which the majority seems to agree with, then it's reasonable that they should pay only 50% of my costs in a private hospital.

Brendan

 

[Ceist Beag]

But if the state pays 100% of the costs for anyone in a public hospital which the majority seems to agree with, then it's reasonable that they should pay only 50% of my costs in a private hospital.

Some of your points have some merit Brendan but I'm completely with TBS on this one. You have a choice to go to a public or private hospital - many don't have that choice. If you choose to go the private route I don't see why tax payers (many of whom don't have that luxury) should have to pay to fund that choice.

 

[Cervelo]

My issue with this tax relief or any type of tax relief like this is that it is not available to all people only to those that have an earned income that is taxable

 

[Brendan Burgess]

Hi Cervelo

Is that true for health insurance? Is it not claimed directly by the health insurance company?

Of course, if it were claimed at marginal rate, it would be more complicated to establish the marginal rate of the taxpayer.

Brendan

 

[Brendan Burgess]

If you choose to go the private route I don't see why tax payers (many of whom don't have that luxury) should have to pay to fund that choice.

Let me try another way of looking at it.

Let's say I am assessed as needing a new hip. There is a 12 month waiting list for me as a public patient.

The state will pay 100% of the cost of it.

I can opt to go abroad and get that treatment and the state will pay 100% of the cost of it.
In some cases, the state will pay a private hospital in Ireland to perform the operation, and again pay 100% of the cost of it.

So I am struggling with the idea that you object to the state paying 50% of the cost, when it's actually saving the state a lot of money.

Brendan

 

[Firefly]

I would prefer it to remain at 20% otherwise I would get more of a refund than someone paying a marginal rate of 20% who takes out the same policy.

 

[Purple]

I would prefer it to remain at 20% otherwise I would get more of a refund than someone paying a marginal rate of 20% who takes out the same policy.

That's because you are paying more tax or, as Shortie pointed out before, you pay the same amount of tax on the same income; i.e. you both pay 20% up to €42,800 and if either of you earn more than that you'll pay 40%. Therefore you both get the same tax break on private health insurance.
In the end private healthcare is a subsidy of the public system as everyone will need treatment so if there was no private healthcare there would be more people in the public system. It is therefore logical that it should be encouraged.

 

[Firefly]

That's because you are paying more tax or, as Shortie pointed out before, you pay the same amount of tax on the same income; i.e. you both pay 20% up to €42,800 and if either of you earn more than that you'll pay 40%. Therefore you both get the same tax break on private health insurance.

You're right - I thought it was at the marginal (41% for me) rate.

 

[Firefly]

Just to add, I think the relief should be the same for all wage rates (as also argued on the pension thread). Those on lower incomes are (I would imagine) just as likely to need medical care than anyone else so should be incentivised to take out health insurance.

 

[Cervelo]

Hi Cervelo

Is that true for health insurance? Is it not claimed directly by the health insurance company?

Brendan

It is at the moment but I just presumed you were talking about the way this type of tax relief used to be done in the past

 

[Brendan Burgess]

It is at the moment but I just presumed you were talking about the way this type of tax relief used to be done in the past

The principle is that it would be good for everyone if people were encouraged to pay for their own health expenditure rather than to reply on the public health system.

I would be open on the mechanics.

I wouldn't have a problem with the government paying 50% of all health insurance, whether it is paid by someone who is paying 50% tax or someone who has no taxable income.

Brendan

 

[Ceist Beag]

So I am struggling with the idea that you object to the state paying 50% of the cost, when it's actually saving the state a lot of money.

The reason Brendan is that there is an inequality there. If you choose not to wait the 12 months because you want it done quicker, that is your personal choice and I think you should pay for it. It boils down to whether you are in favour of a society where those who can afford it get health insurance and access to a service which is typically faster than the alternative, versus those who cannot afford it and therefore need to wait in queue for the public service. I would personally prefer tax money goes purely towards improving the public service offering without some of that being reduced due to relief given to those who can afford health insurance. I get your point that if you encourage more to go private it would reduce the delays in the public as well as reduce the cost on the state and it's a fair argument to make, I just personally don't like how that would favour those who can afford it only.

 

[Brendan Burgess]

I get your point that if you encourage more to go private it would reduce the delays in the public as well as reduce the cost on the state and it's a fair argument to make, I just personally don't like how that would favour those who can afford it only.

But this is what I would call and ideological argument overriding a practical argument.

Everyone is better off if we encourage private health care. But we prevent ourselves from doing so because in some sense, it's seen as not fair.

Come to think of it, why should we allow private housing? Shouldn't all housing be provided by the state and shouldn't it depend on need rather than on ability to pay. A two tier housing system is unfair.

Brendan

 

[Sarenco]

Brendan

Would you favour making private school fees tax deductible?

It's the same argument really - private schools take pressure off the public system so why aren't the fees tax deductible?

You appear to be arguing for something akin to the healthcare system in the US, which is grossly inefficient.

 

[Purple]

Brendan

Would you favour making private school fees tax deductible?

It's the same argument really - private schools take pressure off the public system so why aren't the fees tax deductible?

Why not, to the extent that they are subsidising the State?

You appear to be arguing for something akin to the healthcare system in the US, which is grossly inefficient.

Why is encouraging a subsidy of the public healthcare system an argument against the public healthcare system?

 

[Purple]

It boils down to whether you are in favour of a society where those who can afford it get health insurance and access to a service which is typically faster than the alternative, versus those who cannot afford it and therefore need to wait in queue for the public service.

No, it boils down to the fact that we are having the wrong discussion; our public healthcare system is very well funded and should be a better option than the private health alternative. We should be questioning why it is so bad, not why people look for an alternative.