The cost of health
| by Andrea Page 30 Sep 2003 Topic: Personal Finance |
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With private medical insurance premiums rising by an average 10% - 12% a year, and no absolute guarantee of immediate NHS treatment even for a critical illness like cancer, it's not surprising more people in the UK are paying directly for private healthcare as and when the need arises. Andrea Page investigates Last year, Standard Life Healthcare found that nearly 60% of people in the UK would pay to avoid NHS waiting lists, and the private Nuffield Hospitals group says 'self-pay' now accounts for around 30% of its procedures. A mid-priced private medical insurance (PMI) policy for a 40-year-old male non-smoker based in London is around £80 a month, according to comparison website Moneysupermarket. Extending that cover to a 35-year-old wife and two young children can easily cost the family £200 a month, while a couple aged 60 and 65 could easily pay £300 a month. (Premiums vary widely for each scenario.) PMI does provide the comfort of knowing you can get treated and return to your job and family quickly. But Penny O'Nions, a doctor and principal of independent financial adviser The Onions Group, warns that you must be sure you can afford PMI in later life, when you're more likely to need treatment and hefty age-related increases can kick in. Around 95% of PMI claims are for amounts up to £5,000, says Roger Hymas, chairman of Health Care Navigator, which sources private medical care for self-payers. However, if you are unlucky, PMI starts to look attractive; a 'standard' type of heart bypass usually costs £10,000 - £15,000, but serious complications could inflate that to £50,000 - £60,000. 'Often there can be price variations of up to 100%,' adds Hymas. 'With cataract surgery we know you can pay between £1,450 and £3,500 just a few miles apart.' Health Care Navigator charges £60 a year per household, and usually recommends three or four specialists. You can also include overseas hospitals. Goprivate, owned by PMI provider Exeter Friendly Society, also sources private medical treatment and negotiates costs; it charges £34.95 a year for individuals and £39.95 for families, and also acts as a PMI broker. Consultants tend to be more respectful of self-paying patients than insurers, claims Hymas, so there's less chance of unnecessary tests and consultations. Many private hospitals even offer fixed-price treatment packages. Nuffield Hospitals will do this unless your particular physical condition prevents it, and the price includes treatment, overnight accommodation and one post-treatment consultation. Current guide prices include £1,400 - £1,800 for a hernia operation and £5,900 - £7,700 for a hip replacement. If you have to stay in hospital longer than expected, or if any complications arise from the procedure within 30 days of leaving, you won't pay for further treatment. Paying directly means you'll probably have to be more proactive than you might as an insured patient. Health Care Navigator encourages clients to learn about their condition and ask the right questions of GPs and specialists concerning cost and suitability of treatment. 'There's a tremendous choice in the way any procedure is done or even if it's appropriate. For example, with breast cancer, the rate of radical mastectomy is much higher in the north of England whereas a lumpectomy is more common in the south,' says Hymas. He often advises using a private patients unit in a NHS hospital for cancer care, as the NHS has expert cancer centres. Given NHS hospitals don't offer fixed-price packages, costs could spiral if secondary tumours developed, requiring extensive chemotherapy. Because of such risks, The Onions Group favours combining direct payment with PMI. A 28-year-old man could buy a comprehensive PMI policy with no policy excess for around £50 per month, and deposit £3,000 into a mini cash ISA or savings account, topping it up each month. As the savings build he could increase the policy excess and later reduce outpatient benefits, both of which would reduce the premium, diverting the surplus into the savings pot. Once the fund reaches £10,000 - £15,000 he could scale cover back to inpatient-only treatment. 'At some point it will become self-generating with the interest from the fund paying for the basic PMI premium, and the capital paying for any excess plus things like your glasses and dental treatment,' says Penny O'Nions. It's important to check the PMI smallprint; for example, if a policy offers £1,000 of outpatient care and you choose a £1,000 excess and later have £1,500-worth of outpatient treatment, certain providers won't cover the additional £500. PMI providers are introducing self-pay elements. WPA's Self-Pay Protect plan refunds 30% - 75% of inpatient bills plus follow-up outpatient costs to a maximum of £100,000 annually. Effectively it's a health cash plan rather than insurance cover - these pay specified cash amounts for various outpatient treatments and inpatient stays, whether in the private or public health sector. Another way to offset private healthcare bills is a low-cost PMI plan covering only expensive inpatient and daypatient care. Hazel Gregory, director of broker Medical Insurance Services, believes this provides a useful safety net. One provider quotes £37 a month for a 40-year-old; half the premium for its comprehensive policy with no excess. 'I'd suggest looking for a policy that provides some post-operative cover,' she adds. Bupa's HealthCare Select cover can be restricted to inpatient and outpatient treatment for cancer and acute heart conditions. The monthly premium for a 40-year-old man based in Guildford is £25.04 with no excess, against £57.21 for its comprehensive HealthCare Select Option 2 policy (both with national hospital access). Comprehensive PMI cover with a significant excess of £500 (or even £1,000 for very healthy people) can work well if you can't afford even minor disruptions, says Gregory. 'If you have a good nest egg then you could also consider a very high excess as it's surprising how much it can bring costs down,' she adds. Bupa's £57.71 premium drops to £35.21 with an excess of £500. It's also possible to bolt on extras to this type of cover that suit your particular age and lifestyle for fairly minimal cost. Gregory also advises looking out for 'age-capped' policies with limited or no further increases based on a new age band, although provider numbers are limited. Finally, you could insure yourself for common procedures that aren't life-threatening but still incur a lengthy wait for NHS treatment, while still relying on the NHS for major health crises. HealthNow provides dedicated PMI cover for named procedures, from varicose vein repair to more expensive hip or knee replacement and heart bypass surgery. The monthly premium for a 40-year-old male is £20.30.
Bupa, 0800 600 500, www.bupa.co.uk/heartbeat Andrea Page is a freelance journalist writing on investment, property and lifestyle issues for a range of UK and international titles including Bloomberg Money and FT Expat magazines. | |