Insurance premium tax (IPT) has pushed thousands of private patients back onto the NHS and is costing taxpayers more than £1bn a decade in additional NHS resources, it has been claimed.
The analysis from economics consultancy Cebr and healthcare provider Bupa suggests IPT costs the NHS £126m a year as a result of the extra 200,000 patients driven back to the health service since 2015.
Bupa said if IPT were to be set at the same level as VAT, a further 250,000 people could move from private health into public care, doubling the cost to nearly £300m a year.
Alex Perry, chief executive of Bupa Insurance, argued that raising IPT is “a case of robbing Peter to pay Paul” because it drives consumers away from health insurance straight onto the NHS.
“The danger is that when businesses or individuals stop or downgrade their health insurance policies, they are solely reliant on the NHS for their healthcare needs, including costly care and treatment for conditions such as cancer, heart and joint surgery which their health insurance policy would have covered,” he said.
IPT has almost doubled since 2015 from 6.5% to 12%.
The poll suggests cost is the main factor for the public when choosing to buy health insurance.
One in three (33%) policyholders said they would consider cancelling their policy if their premium went up, while the same proportion of the wider UK public would consider taking out insurance if costs were lower.
Two thirds (63%) of people said health insurance allows others to access NHS treatment earlier and 55% view it as important in relieving pressure on the NHS.
“Ahead of the Budget Statement we’re calling on Government to commit to freezing the standard rate. If the decision is made to increase the rate of tax on health insurance again, the NHS and all those using it will be impacted,” warned Perry.
Stuart Scullion, executive chairman at the Association of Medical Insurers & Intermediaries, said the report shows the government is not considering the wider implications of generating revenue from IPT, particularly in relation to the costs to the NHS and health sector.
“There are many consumer purchasers of private medical insurance (PMI), including many older citizens, who are going to be forced back into using NHS services if the cost of their PMI becomes unsustainable,” he added.