Private Medical Insurance Set for Review in the UK

Posted on Dec 22, 2010 by Sergio Ulloa (G+)

Following the British's government's announcement that it will be embarking on major reforms and an overhaul of its long established National Health Services (NHS), the country's independent body responsible for ensuring fair competition is maintained - the Office of Fair Trading (OFT) - has announced it will investigate the private healthcare sector in the country. The formal investigation by the OFT will commence in Spring 2011 and will examine the nature of competition and barriers to entry affecting the private healthcare market in the UK; a market which is worth some £5.5 billion (US$8.5 billion) a year. The private healthcare market in the UK is set to grow in importance, with the impact of changes to the NHS emerging in the period between 2011 and 2015. The healthcare industry in the UK is also being stretched due to the needs of an ageing population and higher life expectancy levels. The UK is a country where the majority of the population are only used to paying a basic contribution from earned income for medical treatment, which entitles a patient to treatment through the NHS for any ailment or procedure required. The purchase of private healthcare is a discretionary option primarily available to the more affluent element of the population or for employees of companies through corporate schemes; the NHS is itself a significant user of private healthcare facilities. However, following the government's decision to overhaul the public healthcare system, the private medical market has come under the spotlight with the expectation that it will play an increasingly important role in the provision of healthcare services in the UK. The OFT investigation will focus of the level of competition in the private healthcare market in the UK at national, regional and local levels and the possible restrictions on companies seeking to enter the market or expand within the market thus preventing the market from developing. A fundamental issue to be investigated by the OFT concerns the application of network agreements between private medical insurers and private healthcare providers in the UK. This has lead to patient referrals being limited to a selected number of independent hospitals in the UK, although, the argument in favor of this approach, is that it minimizes costs by higher utilization of selected facilities. The other concern is that some smaller healthcare providers not in network agreements are being disadvantaged. A contention is that if the UK healthcare sector opens up with more players entering the market, Private Medical Insurance (PMI) coverage will expand and be able to offer the British public lower costs for private healthcare. The benefits of PMI compared with treatment under the NHS are that policyholders are able to get treatment more quickly with a choice of private high quality medical facilities. A separate issue concerns the general purchase of private medical insurance. In the USA healthcare is exceptionally expensive with a local PMI policy being critical for patients to meet medical costs. The NHS reforms in the UK are not expected to result in a USA style healthcare system, however, similarities could arise with PMI and private health coverage being adopted on a more individual basis. When comparing local and international PMI the difference in the scope of medical coverage is considerable, with international policies being more flexible. Local policies will often have more restrictions attached to the policy such as age limits set at 65, annual limitations on claims, higher medical exclusions, more pre-existing medical condition exclusions, geographical limitations and limited healthcare provider availability. Also, current policyholders of a local PMI policy may be barred from renewing cover if an insurer feels the client has become high risk. The alternative to a local PMI policy is an international policy which will have a more comprehensive range of cover provided for policyholders. Although the premiums are higher compared to local PMI policies, fewer exclusions will apply and pre-existing conditions can normally be included for an additional premium. There is also likely to be a larger network of hospitals and medical centres available to policyholders, along with a wider variety of treatment options and maximum policy limits. International medical policies are also transferable around the world, including the USA if necessary. There will be a difference in the calculation of renewal premiums between local and international PMI, with local PMI policies' renewal premium usually based on the previous year's claims made by a client, while international policies are normally renewed on a community rated basis. The benefit of the renewal criteria on a community basis is that premiums will allow for worldwide cover rather than a specific country. If there are changes within the UK healthcare market it could lead to PMI becoming more affordable at a local level in the UK. Currently PMI obtained in the UK is predominately to supplement healthcare services or medications which are not covered by the NHS. Currently PMI in the UK is dominated by Bupa, Aviva, PruHealth and AXA PPP. The benefits of PMI is that it provides the policyholder the ability to avail themselves of treatment for acute medical conditions, private healthcare services, surgery and in / out-patient services, including dental and optical treatments if specified. A comprehensive PMI will offer the policyholder a wide variety of healthcare cover, although the insured does have options to tailor the policy to their specific needs, with optional levels of excess payments. The network of private healthcare facilities will speed up patients' waiting times, particularly in circumstances such as surgical procedures, compared to the use of the NHS system. A key factor in choosing a private medical insurer is that the cheapest rarely offers the best value for money. Insurance Companies Mentioned: Bupa Bupa was established more than 60 years ago in the UK and is now has ten million customers in over 190 countries, and over 52,000 employees around the world. Bupa is a leading international healthcare provider, offering personal and corporate health insurance, workplace health services and health assessments. As a provident association Bupa has no shareholders, because of this it uses its profits to invest in healthcare and medical facilities around the world. Bupa has operations around the world, principally in the UK, Australia, Spain, New Zealand and the US, as well as Hong Kong, Thailand, Saudi Arabia, India, China and across Latin America. AXA PPP Originally known as PPP Insurance, the company became part of the Global AXA Group in 1999 and changed its name to AXA PPP in 2002. AXA PPP is now an international health insurance company with over 2 million customers around the world. Aviva Europe's fourth largest insurance company, with more than 300 years of experience in the global insurance industry, Aviva is committed to the safety and satisfaction of its customers. They sell a broad range of insurance products including motor and property insurance, protection and health insurance, business insurance, life insurance and pensions. PruHealth PruHealth is part of a joint venture named Prudential Health Holdings Limited, between Prudential Assurance Company of the UK and Discovery Holdings. The joint venture was started in 2004 and offers private medical insurance in the United Kingdom. Currently Discovery Holdings owns a 75 percent stake in the joint venture while Prudential Assurance holds the remaining 25 percent.