# Restore tax relief to people paying for their own health insurance



## Brendan Burgess (10 Sep 2017)

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.


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## Sarenco (10 Sep 2017)

TheBigShort said:


> 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.


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## Brendan Burgess (10 Sep 2017)

TheBigShort said:


> 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


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## TheBigShort (10 Sep 2017)

Brendan Burgess said:


> 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.



Brendan Burgess said:


> 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.



Brendan Burgess said:


> 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.


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## Brendan Burgess (10 Sep 2017)

Brendan Burgess said:


> 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


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## Ceist Beag (11 Sep 2017)

Brendan Burgess said:


> 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.


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## Cervelo (11 Sep 2017)

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


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## Brendan Burgess (11 Sep 2017)

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


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## Brendan Burgess (11 Sep 2017)

Ceist Beag said:


> 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


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## Firefly (11 Sep 2017)

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.


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## Purple (11 Sep 2017)

Firefly said:


> 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.


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## Firefly (11 Sep 2017)

Purple said:


> 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.


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## Firefly (11 Sep 2017)

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.


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## Cervelo (11 Sep 2017)

Brendan Burgess said:


> 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


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## Brendan Burgess (11 Sep 2017)

Cervelo said:


> 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


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## Ceist Beag (11 Sep 2017)

Brendan Burgess said:


> 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.


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## Brendan Burgess (11 Sep 2017)

Ceist Beag said:


> 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


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## Sarenco (11 Sep 2017)

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.


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## Purple (11 Sep 2017)

Sarenco said:


> 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?



Sarenco said:


> 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?


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## Purple (11 Sep 2017)

Ceist Beag said:


> 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.


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## Sarenco (11 Sep 2017)

As a general rule, I hate State subsidies of anything.  I would prefer if taxes were kept as low as possible and individuals could make their own decisions how to spend or invest their capital.


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## Sarenco (11 Sep 2017)

Sorry Purple but I'm still not sure I follow.

I'm not arguing that we shouldn't have public healthcare or education.  Equally, I have no problem with private healthcare or education.  I just don't see why the taxpayer should subsidise these private services.

There is no tax relief on health insurance premiums in the UK - why is position different here?  I suspect it's because of (the State owned) VHI's historic monopoly.


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## Purple (11 Sep 2017)

Sarenco said:


> Sorry Purple but I'm still not I follow.
> 
> I'm not arguing that we should have public healthcare or education.  Equally, I have no problem with private healthcare or education.  I just don't see why the taxpayer should subsidise these private services.


Private healthcare subsidises the public system; it treats people who would otherwise be treated in the public system. The same applies to private education although it's a much smaller sector. As long as the cost to the State of the tax relief is less than the cost they would have to incur without the private hospitals then what's the problem?


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## Firefly (11 Sep 2017)

Sarenco said:


> Brendan
> 
> Would you favour making private school fees tax deductible?



Now there's a great idea


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## Firefly (11 Sep 2017)

Sarenco said:


> As a general rule, I hate State subsidies of anything.  I would prefer if taxes were kept as low as possible and individuals could make their own decisions how to spend or invest their capital.



+1


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## ant dee (11 Sep 2017)

I am struggling to understand how my tax refund for my health insurance would be a burden to my fellow taxpayer. I get a refund of a portion of the tax I paid and use it for my health insurance, so i contribute less to the state ( in theory less to the public hospitals).
Then, when the time comes, I go to the private hospitals. I am using the public hospitals less, or not at all, so is it not fair that I get at least some of the tax money back?
With the way the system is now, a person that wants private hospitals is basically paying double, right? Taxes for the public ones ( which he wont use...), health insurance for the private one.

Similar thinking applies to private schools / private schools.

I suspect I am oversimplifying things but why are they so complicated in the first place? Everything the government gets involved into becomes more expensive, less effective and so so slow. Private schools / hospitals would become more effective and cheaper with the increased volume, or at least that's what free market theory tells us. State subsidised schools / hospitals are suppressing the private ones.

The less the government gets involved, the more tax money I get to keep to make my own choices, my own health insurance, private school, pension etc.
Then, the less pressure the government will be in to hand-hold us through everything, like we are unable to make our own life choices.


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## Ceist Beag (11 Sep 2017)

Brendan Burgess said:


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


Surely arguments on political policy should be ideological in nature? I would hate to think that decisions made for a society are made on a purely practical basis Brendan. What you're asking for here is to give relief to a certain section of society, those who can afford health insurance, taking money out of the government coffers and thereby reducing the amount of money available for use in the health service available to those who cannot afford it, based on the argument that in the long run this will make more money available for the public health service as the number of people looking to avail of it will reduce as more move over to the private health service. That is a hard message to sell. 
I don't disagree with Purple though that this might be the wrong discussion to have - the right discussion should be why it seems that we are spending more money every year on public health and getting less in return.


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## ant dee (11 Sep 2017)

Ceist Beag said:


> the right discussion should be why it seems that we are spending more money every year on public health and getting less in return.


Well, unfortunately this happens pretty much everywhere the State gets involved...


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## Brendan Burgess (11 Sep 2017)

Sarenco said:


> Would you favour making private school fees tax deductible?



No, I wouldn't.

The private schools are heavily subsidised through the provision of teaches and grants. 

But by your reasoning, surely the teachers in the private schools should not be paid by the state? 

I hate subsidies as well. 

So either 

1) Charge everyone the cost of their healthcare whether it's provided publicly or privately 
or 
2) If you are going to pay 100% of public healthcare, pay a subsidy of 50% for private healthcare. 

Brendan


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## Sarenco (11 Sep 2017)

Brendan Burgess said:


> But by your reasoning, surely the teachers in the private schools should not be paid by the state?



That's absolutely correct Brendan; I don't think that teachers in private schools should be paid by the State.

I believe in a universal healthcare and education system.  Beyond that, well, people can pay for whatever they want - just don't ask me to subsidise it.

I fully appreciate that is not a popular opinion.


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## ant dee (11 Sep 2017)

Sarenco said:


> I believe in a universal healthcare and education system. Beyond that, well, people can pay for whatever they want - just don't ask me to subsidise it.


See, a universal healthcare and education system means everyone is obligated to subsidise it, through taxes.
If someone doesn't like  it, he can go to the private ones. But he is still getting taxed for the operations on the public ones.
Is is 'being subsidised' if he just gets part of the taxes he paid back?


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