At the interface between public and private healthcare, there are multiple interactions that affect the well-being of citizens. Among the most controversial is that of which regulatory and fiscal treatment should be given to voluntary private health insurance (this insurance must not be confused with the substitute, that of Muface officials, which they access at zero cost and which will be the subject of analysis soon). We are talking about an insurance that the citizen, or the company on behalf of the worker, pays without losing public assistance, to which he maintains the right as a tax-paying citizen. Such as private pensions, let’s say, to complete the public ones, mandatory for contributors.
The debate revolves around whether this form of voluntary insurance should be fiscally subsidized, on the assumption that it relieves pressure on the public system, and whether premiums should be regulated to mitigate risk selection in some cases.
On these issues we generally find conflicting positions so it is difficult to find sufficiently balanced arguments. Some advocate that, indeed, voluntary insurance does replace the use of the public system; it generates a decompression in public assistance in some areas and, thus, eases access for those who do not want or cannot subscribe to those policies.
Others claim that those who subscribe to voluntary insurance are users who use it very often, and that private use does not replace “normal” use – average use with equal need – of what is publicly covered. If everyone considers private coverage as an overuse of health resources, it would not make sense to subsidize it fiscally; but yes if it relieves congestion in some demands that would otherwise put even more pressure on public assistance.
We are always talking about effective cures that the public system does not offer either because of the relative cost or because it considers that it includes elements of utility that, despite being valuable, do not want to be covered 100 percent from the public provision. A kind of co-payment with which everyone pays first and the State then returns it partially with a tax relief.
In the fair terms of the debate, it is worth saying that the subsidy would never be at the nominal rate of the tax it relieves (yesterday personal income tax, today corporate tax), and more so when not all companies can apply reliefs due to the existing limits, or do not need them due to the accumulation of other tax expenses – such as with post-crisis capital losses.
On the other hand, it is not easy to identify the degree of adjustment of the use caused by the waiting list, or to additionally ensure that both have the same need, an essential fact to make a good comparison. Without rationing by means of prices, the opportunity costs of some and others to “queue” depend on many factors, and not all of them are linked to social status, such as age, the fact that they are self-employed or salaried professionals, the patient’s risk aversion, or the anxiety caused by the disease.
In any case, complementary insurance remains the eternal problem of how the public system deals with the treatment of a privately diagnosed condition. In a similar way with regard to the prescription of medicines from professionals who legally reconcile public and private assistance. We know that they are a source of inequality, but the system does not know how to deal with them and simply ignores them.
It is worth saying that, in any case, what the public system does not provide in accordance with the patient’s expectations – not because of lack of effectiveness, but because of high cost – is not prohibited in a democratic society. And if those who want to access it have to do so privately, it might be better to give them a controlled route. An insurance premium is always more supportive than a direct payment (because those who are luckier and don’t need coverage subsidize those who are worse off), and regulating premiums outside of individual actuarial risk, doing so collectively, as with company premiums, must be more redistributive than doing it in individual terms.
Finally, the association often postulated that the more voluntary insurance, the less acceptance to pay taxes to maintain the public health system, does not seem clear. If this hypothesis is no longer clear, even in a country like Sweden, where voluntary insurance has grown a lot – there, at times of falling taxes -, even less so perhaps in our country, at a time of increased fiscal pressure. That there was no such association could be due to the fact that private insurance complements less serious services, and trust is maintained in the capacity of the public system for more complex pathologies.
In conclusion, under the previous premises and the current state of public health financing, a complementary private health insurance in effective health benefits should be tax-deductible both for the income tax of natural persons and of legal entities. And if the mentioned conditions are not given, it should not be in either case.
