IS THERE A FUTURE FOR PRIVATEMEDICAL INSURANCE?
From time to time I am asked the question: is there a futurefor private medical insurance? My shortresponse is quite simple: yes.
It is interesting that Chancellor Gordon Brown, in unveilinghis 2002 Budget, said it was his intention to make the NHS The best insurancepolicy in the world. Insured customersare able to make an informed choice and have the opportunity to switchproviders if they are not satisfied.Accessibility is key - customers should also not be expected to wait 12months for treatment. Can the NHS offerthose things?
In his last Budget, the Chancellor committed 40.2bnadditional money to the NHS over the next five years. BUPA believes extra money alone will not solve the problemsfacing the NHS. Immediately before theBudget, Derek Wanless published the first long-term review of the countrysfuture health needs which was prepared for the Government. His report said the NHS has suffered ahistory of under-investment to the order of 200bn over the last 20years. Mr Wanless shares BUPAs viewthat money alone will not solve the NHS problems. He stated: money alone is not enough and provides no guaranteeof success it is essential that resources are efficiently and effectivelyused. Resources and reform must go handin hand and both are vital. Neitherwill deliver without the other.
The final Wanless report provided further confirmation thatin terms of responsiveness and health outcomes, the UK is below most of ourEuropean neighbours. BUPA has doubtswhether a monolithic NHS can reform itself successfully. Even eastern Europeancountries moved to more of a mixed healthcare economy and private funding whenthey were freed from communist control. The calculations we have done wouldsuggest that even if the Government sustained the planned seven per cent realterms annual increases over a decade, this may not bring down waitinglists. The reason for this is thatdemand for health and care services is growing very strongly, fuelled by agrowing elderly population and the increasing availability of treatments andmedical technology to do things that could not be done before. Productivity,innovation and organisational efficiency all need to improve. Without these changes, people will not getthe healthcare they need and want.
Pressure on an already stretched NHS is further compoundedby the ongoing decline in long-term care bed stock. A recent report by the Joseph Rowntree Foundation identifiedunderfunding of around 1bn and a reduction of 50,000 beds over the last fiveyears. Much remains to be done to makeintermediate care a reality.
BUPA believes that a better approach would be for the publicand private health and social care sectors to work together more closely onboth the funding and delivery of services.The benefits would include giving the patient a greater say and creatinga direct customer relationship between them and healthcare providers. It would also improve responsiveness andflexibility and extend choice and competition.It might also mitigate the future burden on the public purse.
The independent sector is not, and never will be, asubstitute for the NHS, it is complementary to it and offers people choice andaccess to immediate high quality treatment.A healthy independent sector is important: in 2001, it contributedapproximately 2bn to the UK health economy by caring for patients who wouldotherwise have added to the NHS workload.If the private sector did not exist, there would be an extra quarter ofa million people on NHS waiting lists.
Pmi has, and will continue to be, the traditional method offunding private healthcare. Themajority of people buying private healthcare do not want to (and in many casesdo not have the resources to) carry the risk associated with medical treatmentcosts and will want to avoid large bills that exceed their savings or long-termability to pay. Pmi offers people andemployers the complete reassurance that eligible health care costs will becovered by the insurer. Over seven million people already make this choice and indoing so pay twice for their healthcare - through taxes and out of disposableincome.
Howappealing is pmi?
Thefacts speak for themselves:
more people than everbefore are signing up for medical insurance
last year when theNHS had its biggest single injection of cash to date - more people signed upfor BUPA cover than in the previous two decades
BUPA research showsthat pmi is the most valued benefit amongst employees and businesses. In 2001, BUPA grew all of its insurancebusinesses by nine per cent.
However, pmi is no longer solely a policy people take out incase the worst happens. Increasingly,private health insurers are partners in peoples long-term healthcare choices,it is no longer enough for them simply to pay the bills. Insurers have a responsibility to their customersto make clinical quality a priority.
There are clear signs that consumers may be thinkingdifferently about their healthcare, perhaps giving it a higher priority than inthe past. BUPAs Health of the Nationsurvey 2001 found that the number of people interested in new ways of improvingtheir health had doubled since 1998.Combined with an increased awareness of differing treatment options andclinical quality issues, it is clear that a competitive price is no longer themajor deciding factor when choosing private healthcare.
Private medical insurers paid for over 5million worth ofhealthcare every day in 2001. It makesa major contribution to the health of the nation. Last year more people and businesses signed up for medicalinsurance than ever before. People want medical insurance because it offerschoice over where they are treated, and enables them to see a consultant at aconvenient time without waiting. Thefacts speak for themselves: there is a future for private medicalinsurance.
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