Will the NHS ride to the PMI sector's rescue? The idea is not as crazy as it sounds, says Helene Dancer

Can the NHS really save the private medical insurance (PMI) market?

The idea is not as crazy as it sounds. According to Standard Life Healthcare chief executive Mike Hall, the PMI sector may have to work with the NHS to get the ailing service back on track. This would mean generating more business in the private healthcare sector.

It could be potentially good news for a stagnant market.

But the question remains: will the present government accept such a partnership and help set it in motion. As one insurer put it: "Will Brown budge?"

Hall, who has just been appointed chairman of the Association of British Insurers (ABI) private medical insurance committee, suggested that the NHS should concentrate on accident and emergency care, cancer treatment and heart disease and leave other afflictions for PMI to look after.

"I think the private sector should be covering all the things the NHS doesn't need to excel at, like hip replacements and varicose veins for example," he said.

"The private sector is good at doing those things because they're high volume and relatively quick."

But Health Care Navigator chairman Roger Hymas said that 88% of the population does not want PMI. "There are some people who believe in the NHS," Hymas said. He said he doubted that the government would consider using private insurance in public healthcare, adding that Chancellor Gordon Brown is also hoping that the hike in National Insurance payments will help the NHS out of a tight spot.

Hymas said the tax increase was futile. "There is a huge backlog of people waiting for treatment and the waiting lists will consume the resources," he said.

"Also, consultants don't have more time to do their work and there are incentives to work through private hospitals."

Another factor was that the financial benefits of working privately far outweighed public sector salaries, according to Hymas.

So, there seems to be a bit of a vicious circle developing. The present day NHS is a far cry from the system promulgated by the NHS Act in 1948. In those days, healthcare was free. According to Hall, today the public pays twice. "We pay taxes, but there are now prescription charges and charges for eye tests, for example, on top of taxes.

"One thing about human nature is if you're paying for yourself, it changes your attitude. You become a true customer, because it's your money out of your own pocket. You'll become more discerning and more demanding and this will improve the service that you get. This creates competition and there is no effective competition in the NHS," said Hall

Is this where the private sector is key?

Hall said that if the government failed to deliver in the next two or three years and people were feeling the pain of an increased tax bill, perceptions might change.

"If the system is not improving and we're paying for it, it would be interesting to see if it would stimulate more people to say, `Well we might as well give up on this NHS because here they are, pumping in millions more which is going down a black hole,'" he said.

"It has the potential to have a positive effect on the PMI market."

Hall said, in that instance, the government of the day would need to introduce a more mixed economy in healthcare funding. He would not elaborate further, but said he could not foresee a future where there would not be a need for compulsory private or independent financial contributions to health.

"We're the only country in Europe that doesn't have private contributions as part of the official health economy. We make private contributions, but they're completely voluntary and are not counted by the state. It's something that goes on by the sidelines," he said.

"I believe that no government can afford to keep putting up taxes indefinitely and pay for an ageing population and improving health treatment. They will have to move to a situation where it's part funded through tax and part topped up through private contributions."

These are the ideas Hall is planning to present to the government through the PMIC and he said that the committee should be doing more to help promote these ideas and lobby government to start rational discussions.