Is private medical insurance about to get cheaper?

The Competition Commission has come up with a number of ideas to improve competition among private healthcare providers. And that should help lower premiums.

Private medical insurance may be set to get cheaper, after the Competition Commission outlined a number of ideas designed to improve competition among healthcare providers.

According to the Competition Commission too many private hospitals have little local competition. Coupled with the fact that there are high barriers to entry for private healthcare providers it should be no surprise that patients then face higher costs for their treatment.

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How to improve competition

The Competition Commission has come up with five ways to improve competition among healthcare providers.

Divestiture of hospitals

Two of the dominant providers, HCA and BMI, should be forced to sell a total of nine of their hospitals in Greater London, the Home Counties and the north west of England. As a result there would be greater rivalry among providers in these areas on price and innovation.

Private Patient Units (PPUs)

PPUs offer a low-risk way for new providers to enter the market or for existing providers to expand. And as a result of the lifting of the cap on the amount of private income an NHS Trust can earn, there is likely to be an increase in the number of PPUs launched by them too.

The Competition Commission wants the Office of Fair Trading and the Competitions and Markets Authority to review all PPU proposals on a case-by-case basis to ensure they help improve the level of competition.

Incentive schemes

Some private hospitals offer incentive schemes which reward clinicians for sending patients to their facilities for particular treatments or tests.

The Competition Commission wants to see direct incentives banned, with private hospitals declaring publicly the nature and market value of the services their provide to clinicians, what payments are made to clinicians in return for services and details of any clinicians practicing at their hospitals who own equity in any of their facilities (equipment for example).

Hospital and consultant performance

Private hospitals and insurers would jointly fund an organisation which collects and publishes information on the performance of hospitals and individual consultants.

The idea is that, armed with this information, we can all make more informed decisions when choosing where to get our healthcare.

Consultant fee information

All consultants would have to provide fee information in a standard, prescribed format. Again, this help patients make more informed decisions and improve competition.

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Why lack of competition costs you

The prices that healthcare providers charge insurers are set nationally, but the Competition Commission argues that the lack of competition on a local level means that everyone ends up having to pay higher premiums for their private medical insurance.

As a result, should its measures improve competition, health insurance premiums should fall too.

Only time will tell if that actually transpires.

Cutting the cost of your health insurance

Waiting for improved competition to feed into lower private medical insurance premiums may take a while, if it even happens. But there are things that you can do now that will lower the cost of your health insurance.

For example, you can change your cover level. Budget plans exclude outpatient treatment that you can get free on the NHS if you’re prepared to wait and cost a fair bit less than comprehensive cover plans.

Similarly, you can look at what excess you’d be prepared to pay.

For more tips on how to cut the cost of your health cover, check out How to pay less for private medical insurance.

And remember, the easiest way to ensure you are paying as little as possible is to shop around.

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How to pay less for private medical insurance

Private medical insurance: is it worth it?

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