Massachusetts has had for a while a subsidy on new heat pump installations, which sounds great! We looked into getting one. Heat pumps in MA cost considerably more than in the rest of the country, because installers have largely increased what they charge to capture that subsidy for themselves as extra profit.
I predict the same effect here, with private insurance.
That pretty much happens every time any government tries to introduce an “economy kickstart benefit”.
See for example, Hungary. The government introduced “CSOK” a few years back, which was basically a “start your family” free money kit - if you marry and have X kids within Y years of taking part in this program, you get to keep the money for free, no need to pay it back, otherwise it turns into a loan (with sub-market rates mind you so it’s worth taking even if you don’t want kids).
The amount per family was fixed, at IIRC 20 million HUF, or around $60k USD.
Guess what happened?
Property prices shot up, practically overnight, by that amount.
Yeah, I had a quote for a system just before the subsidy increase, and then a few years later, got another quote, and after accounting for inflation, it went up by quite a bit more than the increase.
On the other hand though, while it’s not quite savings passed on to the consumer, it is encouraging the installers to prioritize that technology over other less efficient alternatives. So I suppose it depends on what the end goal is.
If you have an installer selling heat pumps and regular heaters, they’re gonna be much more incentivized to recommend you a heat pump if they get an extra, say, $1,000 in subsidies off marking it up compared to a regular heating system.
But without price controls or very strong competition, it won’t end up actually making things cheaper for consumers.
Massachusetts has had for a while a subsidy on new heat pump installations, which sounds great! We looked into getting one. Heat pumps in MA cost considerably more than in the rest of the country, because installers have largely increased what they charge to capture that subsidy for themselves as extra profit.
I predict the same effect here, with private insurance.
That pretty much happens every time any government tries to introduce an “economy kickstart benefit”.
See for example, Hungary. The government introduced “CSOK” a few years back, which was basically a “start your family” free money kit - if you marry and have X kids within Y years of taking part in this program, you get to keep the money for free, no need to pay it back, otherwise it turns into a loan (with sub-market rates mind you so it’s worth taking even if you don’t want kids).
The amount per family was fixed, at IIRC 20 million HUF, or around $60k USD.
Guess what happened?
Property prices shot up, practically overnight, by that amount.
Yeah, I had a quote for a system just before the subsidy increase, and then a few years later, got another quote, and after accounting for inflation, it went up by quite a bit more than the increase.
On the other hand though, while it’s not quite savings passed on to the consumer, it is encouraging the installers to prioritize that technology over other less efficient alternatives. So I suppose it depends on what the end goal is.
That part is true.
If you have an installer selling heat pumps and regular heaters, they’re gonna be much more incentivized to recommend you a heat pump if they get an extra, say, $1,000 in subsidies off marking it up compared to a regular heating system.
But without price controls or very strong competition, it won’t end up actually making things cheaper for consumers.