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.
Get a free, no-obligation private medical insurance quote
More on private medical insurance:
How to pay less for private medical insurance
Private medical insurance: is it worth it?
How private medical insurance worked for me
Health cash plans: good value-for-money medical insurance?
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@electricblue - I have to say I don't understand your comment. On the one hand you say you have experience of 'impeccable customer service and extremely caring and efficient care', presumably, from 'non-cheapskate options' you use for health or travel insurance. ( although I thought the topic of this article was health insurance, not 'travel' insurance.) On the other hand you say 'That it would be pointless going private'..... If I followed your advice , I would cancel my private insurance and would not be able to comment on their impeccable service. Very odd indeed! Possibly making comments just for the sake of making them? BTW Insurers are always a fair target in my books.
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[B]"Only time will tell if that actually transpires."[/B] Indeed. This government has so far shown an ideological aversion to interfering with private companies so will any of this actually happen?
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Some of the largest private health insurers are not for profit. As far as what to executives are paid, it is better to pay the going rate for expert management. There are too many situations, especially in the NHS, where people have a medical background but are promoted way beyond their abilities as managers. Rather than worry that the NHS has to, on very few occasions, sort out messed up private treatment - I am concerned that drunken numpties should have their treatment paid for under the NHS without recovery of costs. The same sanction should apply to anyone convicted of assault, they should have to pay back all the medical costs of the injured party as would be applied by the NHS. @time2go I don't know what type of Utopia you expect, but insurers are not a fair target. The companies selling your cereals, soap and clothing make obscene profits. If people choose cheapskate options for health or travel insurance they should be very careful to read the small print. My experience of mainstream insurers like PPP and BUPA is that they have impeccable customer service and are extremely caring and efficient. My recent experiences with the NHS is that treatment is offered so fast and in many cases with the same expert consultants, that it would be pointless going private.
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20 February 2014