By Kirstie Redford With the General Election around the corner, solutions for helping the NHS...
By Kirstie Redford
With the General Election around the corner, solutions for helping the NHS have, again, been dragged on to the political battleground. The Conservatives have announced that they will cut tax on corporate private medical insurance (PMI) if elected, a move they claim, would encourage employers to buy cover while giving the NHS some breathing space.
Shadow health secretary, Dr Liam Fox, said the party would scrap tax for employers, who currently pay £100m extra in National Insurance for providing group healthcare schemes, and employees, who pay tax as benefit in kind amounting to £368m each year.
The Tories argue that the tax cuts would encourage more people to pay for healthcare, leaving the NHS more funds to inject into serious treatments such as cancer and cardiac care. In turn, PMI policies could eliminate costly conditions from cover, reducing premiums by up to 30%.
But Tim Baker, commercial director at Norwich Union Healthcare, said that although the cuts would be welcomed by the industry, incentives needed to be employer rather than employee-driven in order to increase the uptake of schemes.
"Scrapping employer's National Insurance is a good idea as it has undoubtedly had an impact on the uptake of company schemes, especially for new firms. Individuals being taxed as a benefit in kind does not, affect employers' decision to buy schemes. This tax generates £368m for the Treasury and if you take it away, you would have to find something to replace it. When it comes down to it, it is the employers who have to pay the premiums, so a tax cut for them rather than employees would act as more of an incentive to purchase group schemes," he said.
Les Curson, director of healthcare consultancy, Nicles, said that the cuts may not be incentive enough to increase take-up. "The proposed tax cuts should be welcomed, but I firmly believe that at some stage, the Government will need to take this a step further and offer tax relief," he said.
l Plans to limit free treatment on the NHS to people earning less than £35,000 a year have also been suggested by Conservative health adviser Michael Goldmith. He said the NHS should provide only core services, encouraging more people to buy private healthcare.
