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7.54 pm
Mr. James Couchman (Gillingham): I trust that the hon. Member for Liverpool, Broadgreen (Mrs. Kennedy) will forgive me if I do not follow very closely her 35 minutes of anecdote from Liverpool.
My hon. Friend the Member for Chipping Barnet (Sir S. Chapman) nudged me with his comments about the new complaints procedure following the citizens charter. I should declare that my wife has been appointed one of the lay chairs for complaints--an unremunerated position--and has held that post for a year.
I was also prompted by the account from my right hon. Friend the Secretary of State of how many substantial capital projects are in the pipeline under the private finance initiative. I should mention that the last major national health service scheme that got under the wire under the old capital financing method was a £60 million scheme for the hospital in my constituency, to give us the up-to-date modern 650-bed hospital that we deserve in the Medway towns and which will replace a lot of very outdated, old and worn-out facilities. Construction has been in progress for some months, and we expect to get the new facilities stage by stage over the coming months; we shall be extremely grateful for them.
I want to draw the attention of the House to a sector of health care that receives all too little notice here and on which the policies of the Labour party remain virtually unchanged. I refer to the private sector, which is resourced principally from private medical insurance and has a beneficial impact on the national health service. That sector is under threat from outside financial factors, but also from the Labour party.
Before Opposition Members make the usual cracks from a sedentary position, let me say that I have never paid a medical insurance premium for myself, my wife or
my children. The only private care that any of us receives is my dental treatment. We are, and always have been, NHS patients, believing in the NHS and cherishing the excellent care that we have had from it. Moreover, in view of my diabetes and my wife's very serious episodes of cancer, it seems unlikely that any medical insurer would take us on except at a heavily loaded premium or with substantial exclusions of disease, or both.
Our situation is not irrelevant to what I want to say. I and my family do not, and almost certainly never will, pay medical insurance, but I would go to the wire to defend the rights of those who want to pay premiums in order, as they see it, to receive prompt treatment, to avoid NHS waiting times for non-urgent elective surgery and to be operated on by the consultant of their choice in comfortable hospital accommodation. I am certain that such people, having paid through tax and national insurance their contributions to the NHS, are making a substantial further contribution by paying medical insurance in order to receive treatment outside the NHS or in NHS private hospital wings. They free up NHS resources, to which they would be entitled, for others such as myself who remain fully NHS patients.
Towards the end of the 1980s, the number of people covered by medical insurance is estimated to have reached between 6.6 million and 7.5 million. Those two figures were published in articles in The Daily Telegraph on Friday and Saturday last week, and The Sunday Times yesterday inclined to the higher figure. Private medical insurance had become a popular feature of many employers' remuneration packages. Indeed, employer schemes probably account for 60 per cent. of all who have cover.
The Government's imaginative decision in the Finance Act 1989 to allow tax relief on medical, though not dental, insurance for those over 60, and for the spouses of those over 60 even if they are not 60 themselves, helped to soften the twin blows of premiums rising with age and having to take over the payment of premiums from company schemes on retirement.
Since 1990, however, the number covered by private health insurance has fallen sharply, to £5.7 million in 1995--a drop of between 1 million and 2 million from the peak. Doubtless there is more than one reason for that, but the core reason is almost certainly sharply rising premiums for benefits that have risen more slowly or even been frozen. Premiums on average are likely to rise by a further 18 per cent. this year, and for elderly subscribers by much more--perhaps as much as 40 per cent. Those increases will be exacerbated by the increase in insurance premium tax from 2.5 per cent. to 4 per cent. in April. That apparently small increase dictated by the Government, however, is as nothing next to the threat by a putative Labour Government to abolish tax relief on premiums paid by the over-60s. If that abolition of tax relief takes place, premiums for the over-60s will increase at a stroke by 30 per cent.--if the relief is lost at the basic rate of 23 per cent.--and for no additional benefit. It is not easy to quantify the figures in pounds and pence because premiums vary so widely between the major providers. Individual providers now offer a range of products, from simple in-patient-only benefits to policies that give generous cover for out-patient and in-patient treatment, even including mental illness.
The number of people covered by medical insurance has fallen, but the amount paid out has risen inexorably. The people who have stopped paying are the relatively younger and healthier subscribers. Those who remain in subscription are the older and less well, who are more likely to claim. Mr. Julian Stainton of the Western Provident Association said this weekend:
We should not underestimate the consequences to the NHS of the collapse in the numbers of private subscribers. One in five of all non-urgent operations are now carried out in private hospitals--many are purchased under NHS procedures--and the range of surgery available is much wider than it used to be. The list is no longer made up of varicose veins and hernia repairs. One in five heart bypass operations and one in three hip replacements take place in a private hospital.
It is not difficult to see what a vital contribution private health care under private medical insurance and in private hospitals is making to restrain NHS waiting lists and costs, especially for the late middle aged and elderly. The danger of a further erosion in private medical insurance subscription by the over-60s, catalysed by the withdrawal by Labour of tax relief on premiums, is all too obvious. Hundreds of thousands of patients would be thrown back on to the NHS's already stretched resources. Private patients also pay for drugs and medication, and many of the patients most likely to cease being private patients would be exempt from prescription charges and entitled to free medicine.
In efforts to constrain costs and increase the customer base, providers are trying to offer lower cost packages. One of the key factors is the right of the provider to direct private patients to particular hospitals, but only if the patient would wait longer than six weeks for NHS treatment. The fact that eight out of 10 insurance claims are for less than £500 and nine out of 10 are for less than £1,000--combined with the new restrictive lower cost and lower benefit policies--may act as a further deterrent to private medical insurance subscription. I anticipate that as many as 30 to 50 of the 220 private hospitals could be forced to close. That might appeal to some of the ideologues on the Labour Benches, but it would mean a reduction in the amount of health care available in the United Kingdom.
The present serious decline in private medical insurance subscription could escalate into a full-blown crisis that would have enormous consequences for NHS resources. It is difficult to put a cash figure on such a catastrophe, but hundreds of millions of pounds, perhaps even £1 billion, could be involved. That is close to next year's increase for the whole of the NHS. The spiteful withdrawal of tax relief on medical insurance premiums, on ideological grounds, by a Labour Government exhibiting all the qualities of old Labour is just the catalyst that would bring huge additional costs to the NHS through the defection of subscribers from private medical insurance.
The situation is reminiscent of 1974 when the Labour Secretary of State for Health, Barbara Castle, waged war on private medicine. She managed a unique achievement
in NHS staff relations--simultaneous industrial action by every grade of NHS staff from consultant to porter. I remember attending the opening of my local hospital as a new member of the area health authority in Sidcup. Mrs. Castle made her speech to a totally empty room, because the opening had been boycotted by every member of staff of that hospital.
The mischief wrought on the health service by Mrs. Castle was merely the overture to the shambles over which her successor, David Ennals, presided later during the time the Labour Government were propped up by the Liberals. The House has often been reminded of the appalling circumstances of the winter of discontent, when the Lib-Lab Government abrogated their responsibility to extremist trade union shop stewards who assumed for themselves the power to decide who should be treated.
We heard the usual mixture of cant and shroud-waving today from the hon. Member for Islington, South and Finsbury (Mr. Smith). Those of us who were members of health authorities or held office in local government--as I did, as a chairman of social services--during Labour's time in Government from 1974-79 remember all too well the winter of discontent and the spectacular mismanagement of the health service. We doubt that the Labour party has learnt anything from the experience of 1978-79. The sinister emergence of Unison on television and billboards in the past two days has reinforced our memory of the havoc created by Unison's predecessor, the National Union of Public Employees, during the industrial action of the winter of discontent. The prospect of Unison pulling the strings of a Labour Secretary of State for Health should send shivers down the back of every patient.
The hon. Member for Islington, South and Finsbury talked at length about waiting lists. What contribution does he think that the abolition of tax relief on private medical insurance premiums for the over-60s would make to shortening waiting times? Several hundreds of thousands of middle-aged and elderly, relatively ill patients would abandon private health care and return to the NHS. That would lead to an explosion of waiting lists, and waiting times would lengthen.
As I said earlier, my family and I are NHS patients. We always have been and probably always will be, but we believe that those who effectively pay twice for their health care help NHS patients to receive treatment sooner. The 5.7 million people still paying for private medical insurance should be encouraged to do so. NHS resources would not then have to be diverted to look after those who would prefer to continue their contribution but could not afford to do so if their premiums rocketed because of unnecessary burdens such as the withdrawal of tax relief.
"Private medical insurance is becoming a product that only rich, relatively ill people can afford."
He foresees a tightening of the vicious circle, with higher premiums for fewer people, unless steps are taken to break the circle by constraining premiums and attracting back the younger and healthier into subscription.
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