Time for a healthy debate

Pressure on public finances means fiscal barriers to private healthcare should be lowered, says Andrew Tripp, chairman of the Association
of Medical Insurance Intermediaries


There can be no doubt we live in very interesting, and slightly frightening times.

Following an inconclusive result at the general election we now face the prospect of a coalition government, with all the ramifications of a weak government with no clear mandate, and the very real possibility of a further election when things break down before the end of 2010. That makes me think the country is in for a very rocky period indeed.

There are very real dangers that the government coming out of this current fiasco will not be able to finance its deficit without a significant premium, in terms of interest payments, from the foreign money we require just to stay afloat. We will be seen as a significant risk to investors, and the knock on effect as it relates to healthcare spending on the NHS in the UK could be very serious. With budgets in nearly all NHS trusts under pressure, and the prospect of no further funds being available from central government, healthcare will become a very big issue over the coming years, not only in the media, but also in the public consciousness.

Taken against this backdrop, the news that Prudential Health is to take over the fourth largest PMI insurer Standard Life, subject to regulatory
approval, would indicate to me that the South African Insurer, Discovery, believes that there will be very good opportunities for growth of the private sector in the coming years.

Against a background of a public perception of the NHS being in crisis, the inability of people to access new cancer drugs whilst uninsured and over 8,000 citizens [Office of National Statistics] dying of infections contracted in NHS hospitals, I too think there are significant opportunities,
not only for the PMI sector, but also in the cash plan market.

Cash plans are significantly undersold in the UK, and it is worth bearing in mind that in 1948 over 20 million working people were makingpersonal financial contributions towards healthcare provision, and set against the current 6 million benefitting from PMI there is significant room for growth. There is much the authorities could do to help in this regard.

The first thing that they could do is to reintroduce the tax relief that was removed in 1997 by Gordon Brown. According to statistics there were some 550,000 over 60’s that used to benefit from such relief, and upon it’s removal many gave up their insurance, and in so doing created more pressure on an already stretched NHS.

I would urge any government to look seriously at granting generous tax reliefs to those families who are willing to take responsibility for the
provision of healthcare. And this should not be limited to those over the age of 60.

Something the government must not do is increase the current rate of insurance premium tax. On health related insurance products this tax
is currently levied at a rate of 5 per cent, and there have been rumours for many months now that the rate of this tax might be increased fromit’s current rate to that of VAT. This would be a highly retrograde step, and totally self-defeating.

There are very real dangers that the government coming out of this current fiasco will not be able to finance its deficit without a significant premium

The third thing the government should look at is giving employers more incentives in order to help to provide health related insurance to their staff. They should look at the NI implications on employers of putting PMI in place and seriously consider removing the P11D implications for the beneficiaries of medical insurance. The amount of tax take they would lose would be absolutely miniscule, but the benefits in terms of having a higher insured population would more than offset any losses to HMRC and relieve the burdens on the NHS. This relates not only to PMI but also dental insurance and cash plans.

Finally, as the newly-elected chairman of AMII, I am absolutely delighted at the introduction, in association with the CII, of the new IF7
health insurance qualification, which will I hope seriously improve the professionalism, and knowledge, in our industry. This will ultimately benefit not only consumers, but also the reputation of our industry to everyone’s mutual benefit.