The future of the NHS and private health insurance

NHS Confederation, the independent membership body, outlines in the conclusion of a report on the health service, the problems faced by the NHS in the spending squeeze, "The need to address the challenge is obvious, but action is required now and at all levels. Many staff will require new skills and approaches to help them do this. We will need to strip away the obstacles that stand in the way of innovation and change and be prepared to challenge much of what we currently do. History suggests that failing to deal with the spending squeeze will lead to problems large enough to call the whole NHS into question. The NHS has survived three of these in the last 25 years. We cannot assume it will survive the next. Only strong leaders who are prepared to make courageous moves now will get us through one of the greatest challenges the NHS is ever likely to face."

New health secretary Andy Burnham replies, "On this occasion they do not know the outcome of the next spending review. The NHS will enjoy pretty healthy growth this year and next. And the prime minister has said the NHS will continue to enjoy growth in the period after that. But they are right to say that the NHS cannot grow at the same rate it has in the last decade. We have trebled spending and obviously I would argue Labour has a very proud record on looking after the NHS.What we get in this country, in terms of how much we spend on GDP on health, is often lower than other countries and yet we manage to get a quality and universal health system.”

Shadow health secretary Andrew Lansley responds, "We need to get the numbers right. The NHS Confederation are looking at the present government's spending plans which imply government expenditure has to reduce by seven per cent in real terms over three years. They have applied that figure to the NHS.Where the Conservatives are concerned, we have made it clear beyond 2011 that our plans include real-terms growth for the NHS. So I don't start from the same assessment of the financial circumstances for the NHS.What I do say is that in this report there is the right challenge for the NHS. The leadership challenge is always a challenge to deliver improving efficiency and improving quality using the resources the NHS has available."

Although both major parties claim they will sustain or increase NHS spending, each accuses the other of actually cutting spending. They may both be right. Whoever is in government would find it very difficult to actually cut spending, but that is not the point. The real problem is with an ageing and increasingly obese younger population, plus a dramatic rise in the country’s total population. Add the cost of new drugs and medical techniques, and you have an NHS needing higher increases in spending to stay still.

Politicians may talk financial mumbo jumbo all they like but they cannot conceal the fact that any government will need to curb spending. If the NHS now gets £x a year, but in two years time it needs £x plus £2y to stand still, and £ x plus £ 4y to improve services, crowing that you have done all you can by only spending £x plus £y may look good, but will mean a back-sliding NHS. Whether any politician has the bottle to actually cut NHS spending by abolishing all targets and central controls, immediately doing away with the army of managers and administrators, is doubtful.

On this analysis private health insurers may feel elated that whoever wins the next election, there will be a greater need for private healthcare and their products. But an insurance trade body has released shocking statistics that almost a quarter of people admit to cancelling or not renewing their contents insurance to save money. Other insurances are also being ditched, despite the fear of being unable to cope with the unexpected being the biggest single concern for families in the recession.

We have already called on health insurers to both develop low-cost value ranges and promote those they already have. Some have started to ditch ’take it or leave it’ packages for products where a customer can have full cover if they want, or at a greatly reduced price only buy the minimum cover. Others talk about what they plan in coming months. But insurers, you no longer have the usual 12 to 18 months to develop and launch a value product. Forget the focus groups, the tedious committees, the worry about what your rivals will do and all the other clutter. If you have a value product coming up, appoint a champion to push it through now, as if you drift along at your normal pace you may find the customers have gone by the time you launch.

Health insurance: Hot Topic: June 2009