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Tony Levene: Could opportunity knock for the PMI industry?

And could the 70th anniversary of the NHS open new doors?

You can cry “wolf” a thousand times and nothing happens. But those around you still have to worry because it might be true the next time. Cue “NHS Crisis” headlines. The National Health Service has been in crisis for almost ever, perhaps all of its life as the state healthcare scheme celebrates its seventieth anniversary on 5 July.

Shortly after that, we should get the long-awaited government Green Paper on healthcare and social care. It was scheduled for 2017 but the election got in the way.

No one – except the authors – knows what exactly is in it. And there do not seem to be too many rumours – suggesting unhappily it might not say much. In any case, we’ve discovered how the best of intentions never see the light of day – so expect a lengthy “consultation” process and perhaps the quite burial of whatever it comes up with. This could present an opportunity for PMI. Whether it grabs it or ignores it could determine if the future is expansion or retreat.

But despite the seemingly non-stop crisis, the NHS somehow soldiers on. Yes, some outcomes are deplorable. Mostly, however, it just about works. Politicians can always remind disgruntled voters that it’s “free” and the US model absorbs around twice as much money for similar outcomes.

To make NHS matters worse, it had a deficit of £960m in the last financial year compared with the £496m planned. The Nuffield Trust thinks the real figures are even worse once you allow for one-off economies and emergency funding.

And that’s despite having the among the lowest per capita numbers of doctors, nurses and hospital beds in the western world, according to a new study of international health spending from the King’s Fund. So the UK is still in the Premier League – but permanently in the relegation zone.

To narrow the cap between what is provided and what is expected, Chris Hopson, chief executive of NHS Providers believes a 5% annual increase in NHS funding is needed to match European levels of care. This is equal, he calculates, to 9p extra on income tax or an additional seven per cent on VAT. Once you look at this sort of money, then some version of insured healthcare could look a viable alternative.

In the past, the private healthcare world has seized on real or imagined NHS failings – not hard to do that – with the line that individuals could avoid all that by signing up to PMI cover. Did that work? Almost certainly not. That line was a leaden balloon – destined to fly nowhere once people discovered the premiums.

Whatever its shortcomings, the NHS retains a good image – even government ministers are careful on that one. And whatever the advantages of private healthcare, providers have to overcome its “high cost only for the very rich” image.

But that does not mean the PMI world can afford to sit back, ignore the Green Paper and effectively stay where the outsider’s perception so often puts it – as a cottage industry appealing to the well-heeled in just the same way as top of the range frock shops appeal to the richest women in society.

One thing that the constant NHS crisis has achieved is to make people aware that the present model cannot continue unless patients wish to see conditions worsening. So could the Green Paper be the game-changing report that will drag the state system into the present century?

There is an awareness that bringing healthcare – and this is before we even consider social care – up to acceptable standards means someone paying for it. The public is becoming evermore aware about the state of the health and care system.

The Health Foundation and Institute for Fiscal Studies jointly proposed vast increases in health and care spending funded through increased taxation.

They say: “We will need consensus both on the value of an effective health and social care system and on how to raise revenue to fund it as the economy grows. We can’t have it for free. If we are to raise spending… then taxes will have to rise.”

They add that spending needs to increase by 2% of GDP over the next 15 years just to maintain current levels of performance and by 3% if the service offer is to be modernised. That means at least £40bn of additional funding, or more than £60bn for improved services.

There is a lot of talk about hypothecation – a tax specifically for health and social care. If that was proposed, then the PMI world would need to point out this is not much different from paying insurance premiums – the model used in the Netherlands and elsewhere although there is debate over whether this delivers better outcomes.

The challenge the government faces is trying to square the circle of increasing spending each year on healthcare and not wanting to raise taxes – even Health Secretary Jeremy Hunt is apparently looking for a three per cent annual upgrade while others reckon it may need more like five per cent.

We’ve already raided other budgets including defence and local government to fund the NHS so there is little left there. Raising spending without increasing income tax, National Insurance and VAT may prove impossible – perhaps the population needs to remember that we have lower taxation than most of our near neighbours. You get what you pay for.

There are still some putting it around that all the NHS needs is a good dose of efficiency. Yes, that is always welcome- there are many wellness areas that could be improved while seemingly perennial problems such as bed-blocking need urgent care. But private healthcare is no great model, often with huge inefficiencies masked by high billable costs.

It would be a master coup for PMI to demonstrate that it has a recipe to improve healthcare for all, creating a new relevance.

Otherwise, it will remain a niche for those in good health and those who can afford high premiums. The healthcare industry and in particular the PMI world needs to react positively to the Green Paper. That does not mean repeating the errors of the past. Instead, it means coming up with new ideas if the industry is to go forward.