Perspective: PMI and the NHS – too close for comfort?

Why the industry needs to show its hand if it is to stand up to a more formidable competitor

Lobbyists against the expanding role of the independent sector in public healthcare provision have not, by and large, been open advocates of private medical insurance (PMI). The Keep Our NHS Public campaign has, however, recurrently illuminated two seldom-concordant debates. The debate over the structure of public services and the role of the private sector within it is far from limited to the Department of Health.

The second debate, however, has proven to be a slow-cooking one, attracting to it only the sequestered ministers of the PMI industry – just how serious a competitor is the NHS shaping up to be?

Back in the distant days of unbridled NHS waiting lists and PMI providers’ magnanimous claims authorisation policies, the healthcare landscape was easy to parse. NHS patients were admitted to NHS hospitals, parked in NHS car parks, received treatment in NHS beds and recovered drinking NHS coffee. Occupants of beds in private hospitals, on the other hand, had largely severed their engagement with the public sector from the point of their initial specialist consultation. The corollary of this near total separation was a binding of independent healthcare service providers and medical expenses insurers. Indeed, at times the two were seen as synonymous, a sense later reinforced by the entry of some insurers into private hospital ownership.

Commencing through the Thatcher years, the reconfiguration of the “public sector monolith” was driven by private sector minds, to establish a private sector culture and in substantial part – I don’t think it’s controversial to say – for private sector benefit. In its earliest phases, that shift included opportunities for new financial products too, with the large-scale withdrawal of state-funded dental, optical and long-term care. The increasing number of pay beds provided PMI insurers, and their members, with greater choice. But more threatening developments were soon to emerge, with the NHS providing selected patients with a ticket for operations in private treatment centres, bypassing the traditional insurer-dominated funding structure for access to private care.

Despite its initial manifesto pledge, the subsequent New Labour government firmly held the same course. The contracting of private providers for elective diagnostic and surgical procedures is now inexorably eroding the difference in the care package available to an insurance-funded patient and an NHS one.

This begs some questions. Is there evidence of a pernicious effect upon the PMI industry? Is a continuation of current policy likely to exacerbate the issue? And what of a change of government?

Evidence of the effect in industry performance data is difficult to identify. Several favourable intrinsic factors aid the stability and resilience of the PMI market, contributing to an industry that is only ever likely to degrade gracefully. The role of employment contracts is an important one here in protecting commercial customer contracts. The product is also culturally embedded among certain groups. The past few years have also seen the introduction of increasingly competitive consumer products, creating sporadic spikes in sales activity.

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