Cash plans and top-ups

Cash plans have been around long before the NHS was established - could they form the basis of a European-style health funding revolution?

In the UK, about 7.3% of the population is covered by a health cash plan. This is a low level of uptake when compared to the popularity in other countries of insurance policies designed to help people fund everyday healthcare costs. In France nearly 90% of the population has complementary insurance, designed to reimburse policyholders for out-of-pocket costs of healthcare.

Clearly this level of uptake is the product of many factors, from different healthcare funding systems to historic attitudes towards government intervention and individual responsibility. But are there lessons insurers and brokers can learn from markets abroad?

Charlie MacEwan, corporate communications director at WPA, the private medical insurance (PMI) and cash plan provider, believes that the principle of shared responsibility for costs is important for healthcare systems facing funding pressures.

“There is a fundamental difference between the European and the Englishman,” he says. “The Englishman can be quite confrontational and always argues on point of principle where Europeans tend to be slightly more pragmatic and that is why they are normally involving co-payment and are so much more successful at it.”

While an NHS free at the point of use is almost a matter of religion for the British people, MacEwan points out that charges for prescriptions were introduced as early as four years after the creation of the NHS. In other countries co-payments and charges are used to control consumption of healthcare and MacEwan believes the UK could learn from this approach.

“The minute something is free is the minute you get abuse and uncontrollable inflationary pressures,” he says. “This is why we have gone down the shared responsibility route [whereby PMI policyholders pay 25% of the cost of every claim capped at a maximum amount] – it links people to the cost of their treatment.”

David Castling, intermediary distribution manager at cash plan and PMI provider National Friendly, agrees that attitudes to cost sharing are a question of cultural inheritance but that they may need to change.

“Britain has spent the last 60 odd years being told we should expect all healthcare free at the point of need,” he says. “We can’t about-face overnight. In Europe everyone is sharing the burden of cost. You do get what you pay for and arguably we don’t pay enough for grade one healthcare provision.”

NHS charges?

In France there is a long-standing tradition of the state only partially reimbursing the cost of treatment, with the patient expected to pick up the bill for a set percentage. Complementary insurance is designed to help the French budget for this.

Already in England individuals are expected to pick up at least part of the bill for dental and optical care, some elements of hospital amenity services and prescriptions. But could the Government introduce more charges to the NHS?

“I think the Government might look at the charges already in place or reduce subsidies,” suggests Mike Blake, compliance director at national specialist intermediary PMI Health group. “We might see prescription charges going up beyond the rate of inflation. It is a lot more palatable for the Government to look at existing things.”

He believes that GP charges are “unlikely”, although National Friendly’s Castling believes they are a possibility.

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