Health Care Tax Relief and the Demand for Private Health Care for the Over–60s

This chapter aims to raise some of the issues related to the effectiveness of health care tax relief policies introduced by the Conservative government in April 1990. It examines the extent to which such policies have been successful in reducing the rising demand for publicly provided health care. The chapter also examines the relationship between health care tax relief and total health care expenditure, and the impact on the private health care expenditure. It proposes the theoretical links between various key factors and highlights some of the difficulties in estimating such relationships. The evidence seems to suggest that despite various governments' reforms and cost-containment policies health care expenditure has been rising faster than income. Modelling the private health cares expenditure and to examine the subscribers' behaviour with respect to tax rates and income will require data at the individual level.