NHS fails to dent private insurance

Private medical insurance has remained robust in the face of competition from supposedly falling National Health Service waiting times.

Projections made in 2005 that numbers of people covered by private health insurance could tumble by 15 per cent as NHS waiting times fell have not come to pass.

But neither have there been parallel improvements to private sector care that some analysts hoped would lower the cost of treatment and cover.

Figures published by the Association of British Insurers on Tuesday showed a 1.6 per cent rise in the number of subscribers to all forms of private medical cover, with the number of policies exceeding 4m for the first time.

The number of people paying personally for a policy continued its long-term fall in the face of rising premiums, down almost 300,000 from a peak in the mid-1990s to just over 1m.

But company-paid schemes grew by 2.3 per cent. With their bigger buying power, these have 3m subscribers, made up of cover purchased from insurers and cover from company trust schemes that insurers merely administer.

Using a standard multiplier of people per policy, the ABI estimates more than 7m people have at least some form of private health cover, although not all of those hold comprehensive policies.

Philip Blackburn of the analysts Laing and Buisson said the figures showed that private insurance “has remained robust in the face of NHS competition”.

“It is a stable market that is neither rocking nor rolling, but it shows that the big investments in the NHS, with shorter waiting times, have not had the impact on the private sector that some feared.”

With both the number of insured patients and those who pay for treatment out of their own pocket holding up well, the figures help explain recent statements by some of the leading private hospital groups that they no longer see an expanded NHS as “core” to their business strategy.

However, Mr Blackburn added that the opportunity presented by shorter NHS waits and greater involvement of the private sector in treating NHS patients appeared to be slipping away, and with it the possibility that this would lead to lower premiums for private patients.

The theory was that, as private hospitals adjusted their business models to deal with large volumes of NHS patients, their greater efficiency would lead in turn to lower costs.

“Some of the hospitals have restructured and are more efficient,” Mr Blackburn said. “You would have thought some of that would have shown up in premiums. But very little of it has so far.”

Premiums still appeared to be rising at between 5 and 10 per cent a year, he said. That was lower than on some occasions in the past, but still well ahead of inflation.


Health Direct notes that these figures for private health insurance shows that labour three tier healthcare system is still alive and kicking.

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