Congratulating yourself on having dreamed up a winning solution can be extremely satisfying… until you come across others who have come up with exactly the same thing.
My seemingly original vision centred around the idea that the NHS burden could be greatly relieved by allowing consumers to have a tax-free savings account which can be used exclusively to pay for healthcare.
The account, which would be permitted in addition to other current tax efficient savings plans, would have similar contribution limits to individual savings accounts (ISAs). It would be ring fenced from creditors in the event of bankruptcy, and from your spouse if you got divorced.
Initially it could be used for self pay but any unused proceeds could eventually be put towards long term care and, if this was not required, could be passed on to your heirs free from inheritance tax.
Nevertheless Mike Hall (Standard Life Healthcare) and Brian Lentz (Portfolio Insurance Consultancy) had quite independently conjured up broadly similar scenarios.
Barriers to implementation
Hopefully there is some consolation to be had from the idea that great minds think alike. But the political barriers to implementation are such that we haven’t exactly been racing each other to the Patent Office.
If Labour backed such a concept it could, of course, be construed as an admission that the NHS had failed. Hall unsuccessfully proposed the idea to the Treasury nearly three years ago and attitudes do not appear to have shifted an inch since. Treasury spokesman Simon Moyse says: “It is currently not something we are considering. ISAs enable people to save taxfree anyway and the proceeds of these can be spent on healthcare.”
Dr. Evan Harris, Liberal Democrat shadow health secretary, informs me that his party is no more receptive to the idea. He says: “It’s not right that people should use significant amounts of their own money to fund care. State funds should be spent on helping those who can’t afford to save rather than providing tax relief to those who can. We need to keep the middle classes in the system to help put pressure on the Government to fund the health service.”
The unlikely prospect of a return to power by the Conservatives provides the only glimmer. A party spokesman reminds me that before the last election they had this type of mechanism in mind, albeit for long term care only, and that they remain open minded on healthcare funding issues generally.
But even genuine Governmental interest in such a concept could wane in the light of a host of obstacles that would come to light at the consultation stage. The most common concern expressed by the dozen health insurance experts I discussed this with is that the system could be open to significant abuse.
Could it be open to abuse?
Serious thought would have to be given to exactly what the proceeds of the account could be spent on. Most agree it should only be for the account holder’s benefit but Nick Kirwan (Scottish Provident) feels strongly that the account holder should be able to fund treatment for anyone in the family.
Everyone agrees that healthcare should only be purchased from professionals authorised by appropriate bodies. But where should the line be drawn? Should you include cosmetic surgery, infertility treatment, counselling and some of the more pleasurable alternative therapies?
Even without these fringe treatments there is a danger of creating unnecessary demand for more mainstream ones.
Penny O’Nions (Onion Group) says: “Hypochondriacs would regard this as a blessing in disguise as they could get tax relief on seeing any doctor they want to. It could therefore waste doctors’ time and we cannot afford that.”
Simon Farrant (Towry Law) and Peter Bye (The Private Health Partnership) are particularly concerned that such accounts could simply become used as a convenient tax avoidance tool for the wealthy.
Farrant says: “There is a danger that people might not spend the proceeds when they are ill and use the NHS instead. If the Government made it compulsory for them to use the account, the NHS would no longer be free at the point of use for everyone.”
Paul Cowman (AMP), George Connelly (Health Care Matters) and Shelley Roberston (Skandia) would prefer simply to have tax relief available on premiums for all health insurance products. They acknowledge, however, that offering such an account in addition could be useful for complementing high excess medical insurance products, enabling policyholders to self pay for the smaller amounts.
It could also provide those with nonstandard health risks who cannot afford heavy premium loadings on critical illness policies a way of building up a degree of self insurance.
Edmund Tirbutt was voted Freelance Journalist of the Year by the Association of British Insurers in 2002, 2000 and 1998