Labour’s health insurance tax rise attacked

By Robin Stride

Labour plans to increase the rate of insurance premium tax to 20% for private healthcare insurance to fund free parking at NHS England hospitals have been attacked by insurers and private hospitals.

Stuart Scullion, chairman of the Association of Medical Insurers and Intermediaries (AMII), said: ‘Jeremy Corbyn’s Labour Party manifesto announcement that they will increase insurance premium tax on private medical insurance (PMI) premiums just goes to show how far removed from reality they are.

Stuart Scullion, AMII chairman

Stuart Scullion, AMII chairman

‘PMI is not some executive perk for the wealthy. It is purchased by almost four million working- and middle-class people who want to take a responsibility for their own health and well-being. Increasing insurance premium tax will simply force those who are willing and able to buy PMI back into an already overstretched NHS.’

Insurance premium tax has already rocketed under the Conservatives, rising from 6% to 9.5% in November 2015 and to 10% last November. In June, it is due to increase to 12% – a move already condemned widely in the industry by doctors, Bupa and other insurers.

Mr Scullion said: ‘There are just under one million consumer purchasers of PMI, including many older citizens, who are going to be forced back into using NHS services if the cost of their PMI becomes unsustainable. How does that benefit the NHS? I would be keen to see how the Labour Party has costed its plans whereby they can be confident of a net benefit to the NHS and its users through the removal of hospital parking charges.’

Private sector could ‘reduce NHS strain’

He added: ‘A more creative approach would be to look at how the capability of the private sector could be harnessed to reduce the strain on the NHS, operationally, financially and by reducing waiting lists.’

The AMII only last month launched a petition against any increase in insurance premium tax (see ‘Help stop tax rise’) with the aim of securing 100,000 signatures within six months so the whole issue can be debated in Parliament.

But the snap General Election meant it had to put the petition on ice. Now it will be re-launched immediately after the re-opening of Parliament.

Mr Scullion warned: ‘We are not going to stand back and watch any political party wreak havoc with the healthcare industry by the unreasonable increase in insurance premium tax in the interests of the consumer. Healthcare spend should be tax-exempt as it is across much of Europe.’

What private hospitals say

Fiona Booth, chief executive of the Association of Independent Healthcare Organisations (AIHO), said: ‘Labour’s proposal to increase tax on health insurance will hurt rather than help the NHS; discouraging people to take out health insurance will ultimately mean longer waits for all patients across the country.

‘Health insurance is held by a broad range of people, delivering faster access to care. What Labour are proposing will put a further squeeze on the incomes of those families that are just about managing, while placing an additional burden on the NHS.

‘We need policies that make it easier for people to choose fast, effective and high-quality care that works for them while driving innovation, efficiency and greater productivity for the UK economy.’