IN July the Secretary of State for Health presented a White Paper to Parliament titled Saving Lives:...
IN July the Secretary of State for Health presented a White Paper to Parliament titled Saving Lives: Our Healthier Nation. The paper set out a fresh approach to public health, one which aims to improve health for everyone by combating the key killers in the UK - cancer, heart disease, stroke, accidents and mental illness.
The White Paper is over 150 pages long, so it is only possible to scratch its surface here. However, from a study of the key factors affecting health it is easy to see why the Government has decided on a partnership approach to its improvement. The targets it has set will not be achieved by tackling a single problem in isolation. Instead, a diverse set of strategies is needed to address each one that has been identified.
The Government's action plan aims to improve the health of the whole population, but in particular that of the worst off. By 2010, ministers aim to reduce the death rate from:
l Cancer in people under 75 by at least 20%.
l Heart disease in people under 75 by at least 40%.
l Accidents and mental illness by at least 20%.
Achieving these targets would prevent up to 300,000 unnecessary deaths.
Healthy relationships
At the heart of the plan is the concept of a partnership between individuals, communities and government. People can improve their own health, but to make the right decisions they need to be properly informed about risk. A number of initiatives will help achieve this, such as NHS Direct, a telephone and internet health advice service run by nurses.
A further initiative is the reorientation of the NHS to ensure health improvement is integrated into the local delivery of healthcare.
To ensure the project is a success, high performance standards need to be set and monitored. A new Health Development Agency is to be set up to do this, with responsibility for raising standards in public health provision. Progress against milestones in the four priority areas will be measured in 2005.
Identifying dangers
Let us examine the factors that affect personal health to gain insight into where the new strategies might have maximum impact.
A physically active lifestyle is a key to good health, in particular for reducing the risk of heart disease and stroke and promoting good mental health.
Most people spend more time in their homes than anywhere else. The home environment, therefore, has an important impact on health. Equally, employment has a positive impact on physical and mental health.
A balanced diet with plenty of fruit and vegetables and not too much fatty food or salt is central to good health, helping protect against heart disease, stroke and some cancers.
Smoking is acknowledged to be the single greatest cause of preventable death in the UK from, predominantly, cancer, heart disease and bronchitis.
Finally, education on health risks is important for people to make informed decisions about their everyday life.
Insurance impact
Does this initiative point to lower critical illness and life insurance premiums in years to come? To answer the question, we need to take a closer look at some of the Government's plans.
Two changes above all would cut death rates from cancer - a reduction in smoking and the adoption of a diet rich in cereals, fruit and vegetables.
Screening means cancer can be discovered at an earlier stage, improving chances of survival for sufferers. Indeed, there have been striking improvements in the treatment of cancer over the last few decades, although for some cancers there has been less progress. The Government will therefore promote anti-smoking measures, improvements in diet and efforts to tackle variations in the quality of treatment in the UK.
In the same way, the White Paper identifies a number of changes that would reduce the risk of heart disease and stroke, including better diet, reduced smoking and alcohol intake, increased exercise and the control of excess weight.
As well as campaigns to promote these changes, ministers have pledged to tackle underlying social, economic and environmental conditions that lead to high-risk lifestyles.
Lastly, the Government has committed itself to reduce accidents and improve mental health. Measures in this area aim to:
l Reduce traffic accidents.
l Promote fire safety.
l Lower the suicide rate.
l Improve care for those suffering from mental illnesses.
Lower premiums?
Returning to our earlier question of whether this raft of measures will mean lower critical illness and life insurance premiums, the answer depends on a number of factors, not least the type of insurance under consideration.
As an example, let us take standalone critical illness cover, where the benefit is paid on diagnosis of a critical illness subject to survival for 28 days. The Government's initiative aims to improve treatment of cancer patients to lift survival rates. It is therefore possible for their target for reduced deaths to be met at a time when the incidence of cancer is static or even increasing simply because fewer people are dying from the disease.
A further factor is screening, which accelerates the detection of cancer so that claims are paid earlier. This may lead to fewer deaths through earlier treatment, but insurance rates would increase for those age groups where screening applies.
As far as heart disease is concerned the Government aims to improve access to beneficial surgical procedures such as bypass surgery and angioplasty. However, these are normally covered under critical illness cover. There is therefore the possibility that a heart attack claim may be replaced by an angioplasty claim, resulting in no saving.
Smoking is a major risk factor in heart disease, stroke and cancer. A reduction would have a dramatic affect on the number of people in the general population who contract and die from these diseases. However, from a rating perspective, the insurance industry already reflects the increased cost of claims due to smoking in premium rates. People who continue to smoke will therefore pay higher premiums while those who stop will benefit from the non-smoker rates. Therefore, this strand of the initiative will not per se lead to lower premiums.
Social inequalities
We must also consider other areas the initiative aims to touch, including diet, education, employment prospects and housing. Changes in these factors will also impact significantly on the number of people suffering and dying from critical illnesses.
However, the impact on critical illness rates is far from certain. It is generally accepted that there are great inequalities in health across the social spectrum. So the unemployed and those in the lower occupational classes experience significantly higher rates of critical illness than those at the other end of the spectrum. In practice much of this difference in experience is already factored into premium rates simply because it is the better off in society who are more likely to buy insurance products.
This group in turn is more likely to follow a healthier diet, live in decent accommodation and are less likely to suffer unemployment. The impact of the Government's initiative will therefore be far less marked in this group, if it is noticeable at all. In summary, for standalone critical illness insurance the health initiative is unlikely to lead to lower premiums.
Life cover
If we turn to standalone life cover, however, the picture is slightly different. A number of the Government's initiatives will impact on death rates in the insurance-buying class, including earlier detection and better treatment for cancer.
Improved access to bypass surgery and angioplasty should also improve mortality rates and so put a downward pressure on premiums. However, the affects will take a number of years to become noticeable.
Finally, we come to combined life and critical illness insurance, where a benefit is paid on either critical illness or death. Premiums for this cover are a mixture of the cost of life cover only, where the initiative may mean lower costs and critical illness cover where costs may even increase as a result. On balance we might expect the overall cost to remain at about the same level, although the total cost of combined cover may increase as a proportion of life only cover.
The Government's initiative on improving health, particularly for certain sections of the population, is extremely welcome. Inequalities may be reduced or even eliminated and we look forward to seeing improved health in the general population.
However, the Government will target those sections of the population where the benefits are likely to be the greatest - people who normally buy little or no insurance cover. For the insurance-buying section of the population the impact is likely to be far less. In certain circumstances premiums may even increase.
Gary Collier is actuarial manager, pricing and product development, at ERC Frankona
