Millions of Spaniards are set to face rising health insurance costs as the government scraps tax exemptions for private health policies. The new measure will introduce an 8% insurance premium tax (IPS), directly increasing the cost for over 12.4 million policyholders across the country.
The measure is part of the coalition’s 2025 budget agreement between PSOE and Sumar. The private insurance sector has responded with alarm, warning that the new tax will lead to increased costs for consumers. “This will lead to higher premiums,” industry sources stated. Herewith, confirming they intend to pass the cost onto policyholders. The coalition’s rationale for ending the tax break is that it predominantly benefits higher-income families—a claim that the insurers reject.
“We don’t see this as a benefit for the rich; 30% of Spain’s population uses private health insurance,” argued the sector’s representatives. They claim the proposed reform could lead to an exodus from private coverage, pushing more people back to the public health system.
Impact on the public health system
Insurers, represented by their association Unespa, have warned that this change could have significant consequences for Spain’s healthcare landscape. One in four Spaniards currently opts for private health coverage, easing pressure on public hospitals and services. According to Unespa, an 8% increase in premiums might prompt many clients to cancel their policies, forcing more people to rely solely on the already-strained public health system.
“The shift from private to public healthcare could worsen waiting lists and create an overstretched public health system,” industry sources argued. Addionally, pointing to the potential destabilisation of private hospitals facing shrinking patient numbers.
Ongoing dispute over public healthcare contracts
This comes amid another battle between insurers and the government over the renewal of the Muface public-private health scheme. Earlier this month, major players Asisa, DKV, and Adeslas withdrew from negotiations. Consequently, leaving 1.5 million public employees at risk of losing their healthcare coverage unless the government agrees to increase its funding by at least €100 million.
Broader tax reforms under fire
The proposal to increase the fiscal burden on private health insurance is just one part of a broader tax reform package put forward by the government. It also includes higher taxes on capital income, holiday rental properties, luxury jets, and investment vehicles such as real estate investment trusts (REITs). These measures are part of the government’s efforts to bring national law in line with EU directives.
The new fiscal package, however, faces political challenges. While the PSOE aims to secure the support of its parliamentary allies, divisions remain, especially with parties like Junts and PNV who are hesitant to endorse higher taxes. Meanwhile, the government’s left-wing partners are at odds over the proposed repeal of the windfall tax on energy companies—a move criticised by Sumar as a concession to powerful business interests.
Also read: Private health insurers in Spain benefit from deteriorating public healthcare