January 29, 2016

Private health insurance subsidies: the case of Ireland

Unwinding the State subsidisation of private health insurance in Ireland

Taxes may distort individual decisions and hence resource allocation. Subsidies may have the same effect. Ireland had large subsidies for private health until 2013.
In Budget 2014, announced in October 2013, the Minister announced that charges for all beds in public hospitals would be levied on insurers from 2014, raising € 30 m in 2014. Also in Budget 2014, the Minister for Finance announced that the amount of health insurance premium subject to tax relief would be capped at €1000 for an adult and € 500 for a child. This was expected to yield € 94 min savings in 2014 and € 127 m per year thereafter.
The article explains the concrete situation and policies. Its impact on one statement:
Despite the fears about the effect thes emeasures would have on the private health insurance market, the measures do not appear to have caused significant damage to this market. This may be partly due to the introduction of Lifetime Community Rating by the Government in May 2015, and consequent moves by insurers to innovate at the lower-priced end of the market in advance of this.
Ireland is the closer market to us, we share similar features.