Could private top-up insurance help fund the NHS?BMJ 2016; 355 doi: https://doi.org/10.1136/bmj.i5424 (Published 12 October 2016) Cite this as: BMJ 2016;355:i5424
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I certainly think we need to look at some sort of funding reform, unless the public is prepared to accept considerably less access to some treatments than exists at the moment. It is misleading to suggest that you can get the same level of provision for less than 8% of GDP as you might expect from 10-12%. However in order for any funding mechanism to be acceptable to the British Public, what is necessary is to provide a full service which remains free at the point of delivery. It would also be desirable to avoid regressive funding models, which fall disproportionately on lower income families, and it is probably desirable to avoid too much fragmentation of healthcare provision. It is my view that some form of additional funding though private medical insurance (PMI) could make a contribution towards bridging the gap. The French model of "top up" payments, while it works, is based on a fundamentally different model of contributions through social insurance schemes, and would be difficult to reconcile with the current NHS funding approach. Historically the UK encouraged the uptake of PMI by offering tax relief to individuals and companies, but when this relief was withdrawn, the Institute for Fiscal Studies examined its impact and found the cost to the Treasury of the rebates had been more than the cost of providing the healthcare (IFS press notice, Did subsidising Private Medical Insurance help the NHS?, 9 May 2001). There has been no real appetite in Whitehall since then to reinstate such a system, though one could argue that it was at least in part due to the very high costs of PMI in the UK and the relatively low level of coverage even at its peak.
Of course no system is perfect, but In my view a better alternative would be to consider the Australian model, which requires all those who earn over $88,000 (about £54,000) to pay an additional medicare levy of 1-1.5% of income if they do not take out private medical insurance. Effectively this is an additional tax on higher earners to fund medicare. However the result of the levy is that most higher earners do take out insurance which results in reduced demand on the medicare funds, and increased income for hospitals. -potentially a win-win solution. The risk is that the same caveats about cost-effectiveness might apply as in effect it is a form of tax relief. However the presentation as a supplementary levy appears in Australia to encourage uptake and around 60% of adults in Australia have PMI (a higher proportion than those who would be required to pay the levy). This is not a completely private market either. the largest medical insurance company in Australia is state owned.
Of course any such reform would need to be accompanied by a major overhaul of the PMI market to adjust to a much higher level of coverage. It would be important for instance that insurers should be required to offer cover for prior conditions and to the elderly at affordable rates, and the Australian system does indeed have some incentives and safeguards to ensure this (And in addition reform of social care funding, as recommended by the Dilnot Commission. may also be necessary to make the whole system work effectively). However the fundamental NHS payment structures and processes would not need to be affected by the introduction of such a reform
Overall the advantage of the Australian system is that it is progressive (ie only applies to higher earners), preserves universal coverage and care free at the point of delivery, and doesn't lead to a wholesale two-tier system. In addition it could be applied to the NHS without any major restructure of the existing payment system, and it seems to me more practical than a change to any of the payment systems used on continental Europe
Competing interests: No competing interests