By Catherine Tennant The private healthcare sector is set for continued growth, although there is un...
By Catherine Tennant
The private healthcare sector is set for continued growth, although there is unlikely to be any future incentive from the Government for people to take out private medical insurance (PMI).
According to new research, entitled Challenges for the NHS, published by the Institute of Fiscal Studies (IFS) and financed by the King's Fund, more people are likely to take the private route as the pressures on the NHS heighten.
The report's authors, Carl Emmerson, Christine Frayne and Alissa Goodman of IFS, said: "It is likely that, in the absence of significant improvements in NHS patient care, the private sector in the UK will continue to grow.
"As incomes rise, more people are likely to choose higher levels of healthcare for themselves and, given the relationship between income and private health insurance coverage, it is likely that the private sector will meet at least some of this additional demand."
"The NHS is also likely to be facing additional pressures from a number of different areas which could lead to an expanded role for the private sector if centrally dictated NHS budgets are limited," they added.
However, the IFS report suggested that the possibility of the Government encouraging individuals to take out PMI in order to reduce demands on the NHS was remote, because the cost of such incentives would outweigh any savings achieved by the NHS.
The authors said: "It is extremely unlikely that the cost of any such subsidy to PMI would be less than the NHS expenditure saved. For example, at least 1.9 million individuals would have to take out PMI for a subsidy to all adults equal to the basic rate of income tax to be self financing."
According to the research, this would be equivalent to growth in terms of PMI penetration of 28%.
The authors added that those with PMI are unlikely to support increases in public health spending and that, conversely, such increases could deter people from renewing their policies.
They said: "There is evidence to suggest that those with private medical insurance are less likely to support increases in public health spending, so that further growth of the private sector could serve to undermine the NHS rather than support it."
"It is clearly possible that the increases in NHS spending that were announced in the recent Budget could lead to some individuals choosing not to renew their private health insurance," they added.
Copies of the report are available from IFS on 020 7291 4800 or at www.ifs.org.uk/healthindex.shtml
