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The future of health insurance in the UK

2nd November 2012 Print

In the last 2 years we’ve seen a sharp decline in the numbers of private health insurance policies being sustained by individuals and by large companies. Research from Laing and Buisson has shown that in 2009 twelve and a half per cent of the British population had private medical cover. By the end of this year it is expected that this will have fallen to around 10% of the population. This is equivalent to a fall of almost one and a half million people insured in the UK.

The main causes of this sharp decline can all be rooted in the recession. Companies have cut back benefits, people are feeling the pinch of the recession and health insurance costs have been rising steadily. We are faced with an increasingly older population and the costs to private health firms and the NHS has increased dramatically. The private health sector has been feeling the pinch significantly from these changes in insurance habits but the future is actually a lot less bleak. Here we’re going to look at why these short term falls are unlikely to be sustained in the coming years.

Firstly we should look at the economic situation. The government recently declared the session to be over. However, the long term effects on the populace and on business thinking are not going to disappear for today’s generations. Austerity has become one of the biggest growth areas in consumer and business thinking. We aren’t going to return to our 90’s highs or to the age of rampant credit particularly soon. But, if business continues to grow and the economy remains stable we are still likely to see a return to growth in the health insurance industry.

The most significant and important factor in the UK when it comes to private health insurance is the NHS.

While we’ve seen steadily increasing prices in the costs of private healthcare we need to realise that the NHS is facing the same exact problems. The difference is that the NHS can’t raise prices. This is a catch 22; as private health insurance costs go up at the same time more strain is put on the NHS. This strain on the NHS is already felt in a huge number of ways. Waiting times are up, health care quality is down and hospitals are struggling to maintain themselves.

As a result of these strains the NHS has had to make changes. Non-essential surgery is being rejected or charged for; which covers everything from the removal of skin lesions to facial reconstruction.  Budgets are being cut across all departments and salaries frozen or cut. The government’s White Paper on the health service has laid the foundations for the privatisation of the health service (or at least as many facets of it as is possible). The reality is that the NHS cannot keep pace with an ageing population, increasing health costs and the financial strains it faces thanks to outdated facilities and equipment.

With these clouds looming the future of health insurance in the UK looks much more optimistic. As consumers realise the inherent difficulties in relying on the NHS more will look to health insurance as a serious alternative. As more strain is put on the NHS more services will become charged or privatised. Combined these steps mean that insurance policies for health are very likely to become more prevalent in the coming years. If the NHS continues along the path to privatisation companies and consumers are going to turn to private providers. The view that private health insurance is an optional luxury is coming to an end and the future of private health insurance seems set.

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