Now that millennium predictions have finally been made redundant, the prophets of the health insurance industry are turning their attentions towards 2010. And the consensus, indeed, the unanimous view, of those consulted about the future state of the NHS and of PMI can be summed up in a single word: “optimism”.
This is perhaps surprising at a time when papers have been overflowing with the NHS’s shortcomings, but the recent flu crisis is considered to have provided the impetus necessary to stimulate the type of debate likely to achieve long overdue changes.
Optimism is founded primarily on the expectation that a government will finally have to bite the bullet and lay down exactly what the NHS can and cannot be expected to do.
The present lack of clarity is everyone’s biggest obstacle. How can consumers decide whether or not they need PMI when they don’t know what treatment is available from a state service which is effectively a series of regional organisations?
Michael Davies, chief executive of CS Healthcare, says: “The NHS was originally designed merely as a safety net, but it has grown and evolved and people have come to expect it to provide for everyone’s healthcare needs. No one has stepped back and asked what it should be doing.
“When you get a crisis you need a bit of slack in the system to be able to cope and the recent flu episode has demonstrated this doesn’t exist. There has got to be a public debate about what the NHS is for. And once the state takes a view on what it’s going to do, the insurance industry will create products to suit.”
No government is likely to implement concrete measures for change until it feels that sufficient votes hang on the issue. The popular view is that the next election will not be won or lost on the state of the nation’s health, but that the matter may have become critical by the election after that. Serious debate at ministerial level is therefore considered likely to still be several years away but it is acknowledged that there will be no shortage of think tanks around the edges of government in the meantime.
Indeed, two major reviews of the healthcare industry hope to report their findings by the end of this year and both will inevitably provide considerable food for public thought.
The Adam Smith Institute, which started commissioning work last December, is assembling a panel of senior figures in the UK healthcare sector and trying to break the funding problem down into constituent parts. Its intention is to work in each one of these areas to develop public and private partnerships. It hopes to produce a final report in October, but also to issue interim reports.
Eamonn Butler, director of the Adam Smith Institute, says: “We will be making public debate more informed and mature than the current sterile arguments about whether treatment should be public or private. We are trying to find a range of solutions and come up with politically practical and commercially deliverable options, not just interesting academic answers, and we will leave it up to politicians to implement them.”
The BMA’s all-embracing review of healthcare funding in the UK announced last December hopes to have a draft document ready for consideration by the end of this year. The BMA is still firmly of the view that the NHS should be financed from taxation but acknowledges that the time has come to at least consider other options.
Mike Hall, managing director of Prime Health, was among those consulted to portray a concrete picture of 2010. By then, Hall believes, the NHS will be concentrating on the delivery of accident, emergency and highly specialist services. For all other treatments it will provide only a safety net for those prepared to wait three years.
This type of restructure would enable the government to save face politically, as everyone would still have access, but it would also enable the PMI industry to target products entirely at the non-emergency category. As a result of the change of focus, PMI premiums could fall by as much as 50 per cent.
Hall also feels that the government will have introduced a health Individual Savings Account to enable those who wish to self-insure to do so tax free. If the proceeds of this are never needed for medical treatment they can be put towards long-term care.
He says: “Private medical insurers will be flourishing and will have become much more innovative. Private hospitals will be increasingly moving to NHS sites as closer partnerships develop and bring costs down. I expect to see the NHS increasingly contracting out of some of its services.” When David Worth, managing director of Leicester-based specialist intermediary Medical Fees Insurance Agency, looks to the future, he sees some very practical solutions to current day problems. He believes general hospitals as we know them today will be phased out and replaced by regional centres of excellence for each medical speciality.
New medical equipment and treatment techniques will continue to be developed but, as is the case at the moment, not all hospitals will be able to afford to install the latest technological advances. The new centres will, however, make the most modem state of the art equipment available to everyone attending for treatment, enabling the NHS to achieve maximum benefit from future capital investment.
He believes fewer people will visit doctors in their surgeries as it will be possible for many consultations to be carried out by videophone link. All surgeries may themselves have video links to the centres of excellence, which may ultimately lead to quicker diagnosis of the medical problem.
Worth comments: “We have already seen dental treatment largely transferred from a state benefit under the NHS to the private sector. Future governments of whatever political stance will start to make similar moves in the provision of medical care in their efforts to cope with spiralling costs and the infinite demand for medical services.
“Political considerations and public opinion are likely to demand that services remain free at the point of supply for children and pensioners but a creeping percentage of medical insurance will be transferred to other individuals requiring treatment. Under this system means testing is likely to be introduced to assist low earners.”
He adds: “Today’s medical service is like a fire fighting service in that it only reacts to a crisis. Over the next 10 years I expect employers and individuals to take a much more positive approach to health management.
“Regular health screening will become a standard feature for everyone, which will detect health problems early on and render them cheaper and easier to treat.”
Funding options will also come to the fore. Alison Platt, deputy managing director of BUPA, feels that within 10 years the emphasis will be very much on insurers and intermediaries offering funding solutions involving a range of health insurance products rather than trying to sell PMI in isolation.
She says: “People will increasingly want to know how they can best spend that £100 a month they have available for health insurance, and insurers who are going to stay in business will have to show they have expertise in the area of health as a whole. By 2010 people will be asking insurers for opinions on hospitals and for data to underpin doctors’ recommendations.
“IFAs will become more involved as a result of significant investment by organisations like ourselves in their education and remuneration. We will see far more in the way of partnerships between IFAs and insurers and they will be helping to influence our product development.”
Somewhat surprisingly, no commentators volunteered the view that PMI may have become a core component in health insurance umbrella products, but it is not something which is unthinkable.
The health insurance umbrella, after years of flattering to deceive, appears to be finally gaining recognition from IFAs, thanks primarily to the successful revamp of Scottish Provident’s Self Assurance umbrella plan last September, which has created a significantly more flexible format. The plan packages together life cover, critical illness cover, income protection, mortgage protection, and a cash plan component.
Scottish Provident acknowledges that there is no reason why PMI should not be included in the product’s menu of benefits by 2010. Although the company doesn’t offer PMI presently, this is not an insurmountable barrier as outsourcing is becoming increasingly commonplace. Already it outsources the redundancy element of its mortgage protection cover.
Norwich Union, which does not offer an umbrella plan, acknowledges that it is ideally placed to do so as a result of already providing the necessary component parts and it does not rule out developments occurring in the long term. And now, following the announcement of a merger with CGU, the potential to package products is possibly even greater.
Norwich Union Healthcare spokesperson Louise Zucchi says: “We are increasingly looking at ways of packaging things together to suit the consumer so a health insurance umbrella is not out of the question in the future. It is something we would want to offer if we felt there was good value and demand so we are always monitoring possibilities, but, because we have already tried and withdrawn mini-umbrellas in the past, we are likely to be treading carefully.”
So, with cautious optimism the words on everyone’s lips in the 21st century, PMI may have found its time has come.