The changes needed in the NHS are going to cost an extra £8bn a year, according to its CEO Simon Stevens. As the election approaches, none of our political parties have a clear plan on how they are going to fund this without either worsening the deficit or increasing taxes. So has the time come for ordinary people to ease the burden on the NHS by opting in to private medical insurance?
How would mass adoption of private medical insurance help with the NHS funding gap?
If many more people were treated privately at their insurer's expense, there would be a corresponding reduction in demand for NHS services. In other words, the NHS would have fewer patients to treat with the same budget.
But isn't private health insurance very expensive?
One objection to this idea is that ordinary people can't afford private medical insurance (unless it's laid on as a free benefit by their employer). But is that really true?
The average amount currently being paid for private medical insurance in the UK is around £73 per month (source: Passport2Health). But that reflects greater adoption of health insurance by older people. For a 35 year old woman, the cost can be as little as £12 per month with a new breed of health insurer like AXA's Health Online. That's less than half the price of a Sky Sports subscription.
Won't we end up like the US?
Widespread awareness of the myriad problems with the (largely private) US health system has undoubtedly increased scepticism about private healthcare in the UK.
But insurance-based health systems have one massive inherent advantage over universal state-funded healthcare, which is this: you and your insurer share the same goal of making you as healthy as you can be. And both parties have a strong financial incentive to make this happen.
That's why it's increasingly common for health insurance companies to give wearable fitness trackers like Fitbit and Jawbone to their customers. These devices are proven to have a positive effect on users' wellbeing; so it makes sense for insurance companies to offer cheaper prices to people who use them.
Similarly, Vitality offers discounts on gym membership, running shoes, and bikes to encourage its customers to exercise, reducing the chance future health insurance claims. These are clear win-wins.
What about people with existing medical conditions?
Unfortunately private medical insurance isn't a solution for people with chronic conditions like diabetes or hypertension, which are typically excluded from cover.
Furthermore, private health insurance companies typically impose a "moratorium", meaning that for 2 years following the start of the policy, you can't claim for any condition for which you've experienced symptoms in the past 5 years.
So there is an argument that mass adoption of private medical insurance would still leave the NHS to bear the costs of the conditions which are the most expensive to treat.
In conclusion
Greater take-up of private medical insurance isn't a "silver bullet" for the NHS funding gap, but it could play a valuable role in reducing the near-term burden on NHS services, as well as helping people with the lifestyle changes that will reduce the future incidence of chronic disease.
