Mission Statement: to assist the integration of foreign residents living in Spain
By Johanna Gardener •
Updated: 14 Nov 2024 • 15:31 • 2 minutes read
Many with private healthcare insurance may see themselves affected by price increases
Credit:Shutterstock:Sunflowery
Millions of Spaniards and Spanish residents may soon find themselves out of pocket as the government scraps tax exemptions for private health insurance packages.
Thanks (or no thanks) to the new coalition’s 2025 budget agreement between PSOE and Sumar, there may now be a whopping 8% insurance premium tax (IPS) tagged on to the end of people s private insurance bills.
12.4 million private insurance policyholders may be affected by taxes
The new measure will apparently affect over 12.4 million private insurance policyholders across the country. And its not just policyholders who are getting nervous. Private insurance companies are biting their fingernails with the possible consequences of the new deal. They have responded shocked and apprehensive about the move. Industry sources have stated: ‘This will lead to higher premiums.’ The sector’s representative also added: ‘We don’t see this as a benefit for the rich; 30% of Spain’s population uses private health insurance.’ Many will be heavily affected by the hiked-up costs despite the coalition’s rationale being that the consequences of the taxes would not be far-reaching, since private insurance was apparently mainly accessed by higher-income families.
Private insurance clients will move towards public healthcare system
Private insurance companies are gritting their teeth at the changes, as they anticipate a mass exodus away from private insurance and towards the free zone of public health insurance, despite the latter also coming under the firing line for slow services and long waiting lists.
On the third wheel, we have the public health system. How will a transition from private healthcare to the public system impact Spain’s public health services? Has nobody thought to take that into consideration. Represented by Unespa, savvy insurers have actually seen this coming. They note that while one in four Spanish residents has private health insurance, Spain’s public health system can just about keep its head above water with the rest. It eases pressure on public hospitals, medical centres and accident and emergency wards. However, with an 8% increase on private policies on the horizon, many would rather face the burden of an already-strained public system than pay the unnecessary extra charges, which seem to have come out of thin air. The consequences of this for a burdened public health system do not bear thinking about.
Would the private health insurance sector diminish with new taxes?
Not only that. What about the private sector itself? Would it then face the same destabilisaiton and shrinking that other major sectors have witnessed? These are all questions that possibly should have been answered before budget proposals, dependent on citizens’ tax payments, were launched.
Tax reform package s implications for holiday rentals and capital income
For those not in the private insurance community and thinking they may have got off lightly, there’s another catch. The huge tax reform package put forward by the government also implies other taxes on capital income, holiday rental properties, luxury jets, and investment vehicles such as real estate investment trusts (REITs). The government will claim that the measures are in order to align with EU directives. This may of course be true, but an EU country with a debilitated healthcare system does not seem to fit the bill either.
The new tax package is struggling to gain ground with opposition parties, however. PSOE’s parliamentary rivals are not prepared to ally with the government leaders and divisions remain with parties like Junts and PNV extremely hesitant to nod their heads to higher taxes. Only time will tell whether private healthcare systems will ever be the same again.
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Written by
Johanna Gardener
Originally from Manchester, UK and with a degree in English with Modern Foreign Languages, she has been a permanent resident in Spain for the past 12 years. Many of these years, she has spent working as a secondary school teacher, as well as in journalism, editing and marketing. She currently lives in the historic centre of Malaga, where she enjoys writing, walking and animals.
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