Insurance tax rise hurts

By Leslie Berry

Independent practitioners have lost nearly 200,000 potential patients in the past three years due to the rising taxes on health insurance.

This is the number of customers who have dropped their policies to depend solely on the NHS, according to the first research to assess the impact of insurance premium tax increases on the UK’s health and social care system.

Insurance premium tax, added to many insurance policy premiums including private medical health insurance, has doubled since 2015 and currently stands at 12%.

The study was run by the Centre for Economics and Business Research (Cebr) and commissioned by Bupa. It found each percentage point tax increase led to an estimated 21,000 health insurance customers cancelling their policies. The tax avoided a further rise in the Autumn Budget after these figures were revealed.

Bupa warned that increasing insurance premium tax again could see even more people cancel their health insurance or reduce their level of cover.

It said this could lead to the unintended consequence that the revenue collected from health insurance fell and NHS demand rose.

Alex Perry

Alex Perry: said taxes on health insurance were counterproductive

The insurer warned the Govern­ment that the tax hit hardest on those who most needed it, because older patients with riskier health profiles paid higher premiums and more tax.

Another study last October found that two-thirds of people consider health insurance allows others to access NHS treatment earlier and 55% see it as important in relieving NHS pressure. The online research was conducted by Opinium among a nationally representative sample of 2,000 UK adults.

Bupa Insurance chief executive Alex Perry said: ‘The taxes on health insurance are unfair and counterproductive. As insurance premium tax on health insurance has increased, we’ve seen hundreds of thousands of people who used to pay for their own health insurance drop out of the market to depend solely on the NHS.

‘This means longer waiting times for everyone else for treatments such as cancer care and cataracts, and even more pressure on over-stretched NHS finances.’

Bupa said cost was the main factor for people when choosing to buy health insurance and this explained the high attrition rates for individual policies as taxes have increased.

A third of people questioned in its survey would consider taking out insurance if costs were lower and a similar number would consider cancelling their policy if their premium went up.

Cebr chief economist Oliver Hogan said: ‘The impact of the tax has not been considered by the Government and we hope this research will make for interesting reading for the industry, the Government and the public.

‘As this is a tax that has increased successively over the last three years, and may increase further in the future, research into the financial implications for the NHS and the welfare impact on patients and society is needed.’