Private Medical Insurance - Optio

In my previous blog, consideration was given to the longer-term impact of Covid-19 on the private medical insurance (PMI) market. Yet since then, concern has grown regarding the backlog of people awaiting NHS treatment, culminating in the government announcing it will increase National Insurance contributions by 1.25% to help tackle the issue.

According to the Institute of Fiscal Studies, the number of people waiting for NHS treatment has grown by a fifth since the start of the pandemic. Health and Social Care Secretary Sajid Javid recently stated that, as more people start to come forward, this will “get a lot worse before it gets better”, warning that hospital waiting lists could top 13 million within months.

For the NHS, at time of writing, the pandemic is no longer its biggest concern but dealing with the enormous backlog it has left. So what effect is this situation and recent developments likely to have on the private medical insurance market? One distinct possibility is that people facing a long wait for elective treatments may turn to private healthcare providers. Some reports suggest this is already happening, with Spire Healthcare, which operates 39 hospitals across Britain, recording an 81% increase in self-pay spending.

While this may seem positive, the reality is that many surgeons, clinicians and other medical staff are likely to have already been requisitioned or are choosing to work more for the NHS. This is already putting pressure on the private sector in meeting its obligations to existing policyholders, as there are only a finite number of cardiovascular surgeons, oncologists and other specialists in the UK.

In terms of how long it may take the NHS to clear the backlog, if it ran at 120% of its previous capacity, which is doubtful following its marathon pandemic-related efforts, it could be five years. Additional Government revenue from tax rises is expected to be used to stabilise staff numbers, increase the workforce in key services and invest in buildings and equipment. However, as training highly skilled staff and building medical facilities are not things that happen quickly, it may be some time before the full impact of Government investment is felt.

In the immediate term, it is unclear whether supply shortages seen in other industries such as retail, construction and others may also affect the healthcare sector. Given this uncertainty, added to that about future Covid spikes and hospitalisations, it is difficult even for experts to make predictions about the future, let alone insureds.

However, for consumers thinking of taking out PMI cover there are various considerations. Some may decide to wait until there is more certainty, but this is gamble, running the risk that queues may be longer if they delay, not to mention potentially harmful. With demand swelling for both state and private medical treatments, a shortage of private beds is a distinct possibility, reducing short-term availability. As a result, the cost in the medium to longer term to private individuals and insurers is expected to rise.

With this in prospect, as part of a situation likely to worsen before it improves, consumers would be well advised not to delay in taking out insurance. Affordability may be an issue for some given the impending tax rises, which take effect from April 2022. Yet there are many cost-effective covers that can be extremely helpful, such as cash plans, diagnostic-only policies or plans for treatment abroad. At present, capacity for private elective treatments remains good despite the pressures, meaning plans such as these, and a host of others, are still able to ensure customers receive the treatment they need sooner rather than later.