Tax deducibility for health insurance premiums?

In principal I support tax deductibility for people when it comes to medical insurance. At the same time, when thinking though the implications of adding deductibility, I have my doubts that it would deliver to the intended people as meaningful cost savings or incentive to take up cover for many of the reasons mentioned above.

At the moment, c. 50% of elective procedures are funded through health insurance. Treasury has likely performed the calculations and come to the view that the increase in the penetration rate of health insurance is unlikely to offset the costs of providing tax relief to existing customers who already hold private health insurance without the relief. Put another way, Treasury probably takes the view that an additional $1 of funding into the public system delivers more service than $1 of tax relief into the private system. Of course, the trouble with this line of thinking is that it does nothing to address the fundamental issue with the health system: the shortage of supply. I’d like to see some new thinking from policymakers on solutions to increase the supply of health talent and facilities.

KTS, agree, the issue isn't just money, it is the delivery apsect as well. There is potential for public/private partnership here, this is where Aussie has gone with their system. Though the risk is anything the government touches will remove efficency and likely increase private costs too... Which seems to be part of what Aussie is dealing with, though with a much larger budget to work with.

A potentially more palatable approach for the current government might be to take FBT off employer subsidized health and life insurance. This would increase the uptake of health and life insurance addressing the underinsurance issue, build better financial resilience into the NZ economy, help relieve pressure on the public health system, improve productivity and ensure more people had access to health care and a financial safety net. At the current rate, FBT makes it prohibitive for employers to offer such benefits.

@Lifer Yes, indeed. When we approached then Health Minister Woodhouse in 2014, he almost laughed before telling us that 'the government is not considering FBT reform or relief.'

Unfortunately, the same fiscal argument applies on FBT as tax incentives - i.e. the increase in the take-up of health insurance is unlikely to compensate Treasury for the loss of FBT already being collected.

Better than tax deductions on insurance would be tax rebates for the cost of procedures that remove load on the public system. How they are paid, either from savings or from insurance, does not discriminate against self-insurers. The ultimate aim should be to relieve the pressure on the public health system, not to subsidise insurers.