Examination of Witnesses (Questions 500
THURSDAY 9 FEBRUARY 2006
Q500 Chairman: Being a mutual, do
you see trends in terms of the money that you are paying out for
NHS charges? Are they reducing, are they increasing? Are there
any differentials that you measure now when 10 years ago it was
not like that?
Mr Hurn: Cash plans pre-date the
NHS and have been in existence since 1922, some of them since
1895, so the premise for paying charges has existed for a very
long period of time. What we see is that as Government policy
is changing and NHS behaviours are changing the needs of our members
and their claims behaviour changes. I will give you a couple of
examples. One is dentistry and another one is that, just over
a year ago when the four hours in A&E targets were introduced
and people were being admitted to the ward, we saw a corresponding
increase in hospital inpatient stay. What we paid for traditionally
was when people used to have loss of income but these days it
covers not only loss of income but also a number of the other
charges that have been spoken abouttelephone charges, car
parking charges, so we help to mitigate the impact of those costs.
Q501 Chairman: Do you expect, with
this concept of out-of-hospital care, to see changes in that way,
that people will not be staying in hospital as long, or indeed
may not even be going in in a few years' time compared to five
Mr Hurn: I think there is a difference
there in that we pay for the event, not necessarily the location.
We do have a hospital inpatient stay plan but we also have outpatients
and day surgery, so whatever the location of that service is we
will still pay for the event. We pay for what the member needs,
so whenever the member accesses that within an NHS trust setting
or at home or in a GP surgery, whatever the case may be in the
future, we will still pay for those. Effectively what we will
see is a change of location but not necessarily a huge change
Mr Hall: My experience is that
we have seen average length of stay in hospital change quite dramatically
over the last decade or so from probably seven and a half to eight
days, if we go back about 15 years, now down to about two and
a half days and that is predicated by the growth in outpatient
treatment and day case surgery.
Q502 Chairman: Do you think that
there is going to be any major change as far as your insuring
the patient side is concerned in the future with the proposed
changes that are about to take place?
Mr Hall: Yes, I suspect so. Originally,
because people were hospitalised for longer periods, there was
an expectation that they wanted a private room with an en suite
because they knew they were going to be there for some time. Given
the choice most of our customers would rather not spend any more
time in any hospital than they absolutely need to, so being able
to be treated quickly and efficiently with good outcomes, either
on an outpatient basis or as a day case, is a preference.
Q503 Chairman: In the medium to long
term is that a threat to your business?
Mr Hurn: No.
Mr Hall: No, not at all. In fact,
if anything, if the move is towards more cost effective treatment
in a more appropriate setting, then obviously the premiums we
charge for access to that may be lower.
Q504 Charlotte Atkins: Mr Hurn, we
were looking at your evidence and obviously you say that payments
should be affordable to all. You recommend a broadening of charges
or the establishment of an affordable shared responsibility premise-based
charge. I am not quite sure what that means. Can you extrapolate
Mr Hurn: If you put it in the
context of what we do, we have people contributing to a fund of
money and these are people who are employed and who tend to be
blue collared workers. People have access to that fund on pre-agreed
terms and therefore what they have access to they have full knowledge
of and it is clear and easy to understand. This is not only driven
by our values but also by the FSA, whereby we have to be fair
and open to our customers, so therefore they know and realise
the implications of them making a claim, not only as to what they
are entitled to but also as to the impact on the rest of the group.
They therefore have an understanding that there are not unlimited
funds, that this is not open-ended, and an understanding of what
they are entitled to as a form of responsibility to the rest of
the group who are contributing to that. I do think that sometimes
public perception of what the NHS entitles them to, of what the
open-ended cost would be, is misguided, especially looking at
future funding of the NHS and extra services being provided. It
is not open-ended. There must be a realisation by people that
there is only so much money that we can utilise in one way or
another. I think it is part education but it is also part understanding
of their behaviour that needs to be brought to people's attention.
Q505 Charlotte Atkins: So you would
very much favour keeping NHS charges and not going to a fully
funded system out of general taxation?
Mr Hurn: We think there is an
existing premise for NHS charges and, as I have said, charges
pre-date the NHS, but I do think we ought to look at mitigating
the impact of those charges because there are a number of people
in society who do presently find themselves hugely impacted by
charges because they are not on certain benefits but they are
not top earners in society and therefore £189 for dentistry,
for instance, can make a tremendous impact on them come the end
of the month.
Q506 Charlotte Atkins: Would you
like to make a comment, Mr Hall?
Mr Hall: The issue for us goes
back to the customer or, in the case of the NHS, the patient.
Our view is that we should conduct research amongst the customer
base, the general public. We know from research we have done that
the majority of a cross-section of people we researched, and that
is the general public, not our customers, favoured charging as
a means of accessing better quality healthcare. There is a strong
vote in favour of paying charges. Only 25% of them thought that
taxation was the best way to do it so more than double that believed
that having control of paying charges themselves was a better
solution. The issue is that no-one actually knows what the public
would value in terms of charges, which services they would pay
for and under what circumstances. Our view is that any charges
should be tapered. To have a position where there is a very fine
line between when you pay and when you do not pay does not seem
equitable to us either, so our view is that it should be tapered
according to their income and their situation. It should not just
be that you pay 100% or you pay nothing.
Q507 Mr Campbell: In the survey that
you took of the general public, are we looking at a case of, "I
am prepared to pay if I can get in quickly and get my operation
before everybody else"?
Mr Hall: It was not the question
we asked them.
Q508 Mr Campbell: Why did you not
ask them that because that does happen when you are paying? If
somebody asked me that I would say, "Yes, I will pay for
it if I can get in quick", because people have to wait a
Mr Hall: That may well be true,
that that was the motivation for some people's answers to would
Q509 Mr Campbell: I am sure it was.
Mr Hall: But that is my point,
I think, about asking them what services under what conditions
they would pay for, and if a more timely service was something
that people would contribute to, thus raising money within the
NHS to pay for improved services for everyone, that would seem
to me to be a fairly equitable way of distributing those contributions.
Q510 Mr Campbell: What you are saying
there though is that they who can pay get it done and they who
cannot have to wait and hope they get the money out to get them
Mr Hall: The question we asked
them was how they would want the issue of increasing healthcare
costs to be dealt with, so it was in the context of a recognition
that the cost of healthcare generally was increasing. As I say,
over half of them answered in the positive, that they would deal
with the increased costs of healthcare by making personal contributions.
It was the increased costs of healthcare per se rather
than the issue of waiting times or waiting lists.
Q511 Jim Dowd: Let us clarify that.
The truth of the matter is that we all pay for healthcare. The
question is, by which route. Are you saying that survey was your
policy holders or the general public?
Mr Hall: The general public.
Q512 Jim Dowd: Just so that I am
perfectly clear about this, is it a variation on the theme that
people actually value more things they pay for rather than things
that they get, ostensibly, for nothing?
Mr Hall: I think that is a truism
in life generally. One of the issues that I believe exists is
that there is no notion of value currently.
Q513 Jim Dowd: Why? Because the service
is free at the point of use?
Mr Hall: Yes. That is not an argument
to say it should not be; it is an argument to say that people
should have the notion of value, so when we reimburse our customers'
costs, even though they do not pay, we do send them a copy of
the bill so that they understand the value of the healthcare they
have consumed. We have done separate research to try and ascertain
the extent to which the public do understand the costs of healthcare,
not just ours but in the NHS as well, and that would seem strongly
to indicate that there is no notion of value. I think only about
one in 10 of the people we surveyed had anywhere close to the
cost in the NHS of doing a hip replacement, for example. Most
of those other nine were woefully low in their estimation of the
total resource cost of providing that service. I think that is
a problem. It is a problem that we are consuming something that
we have no good notion of value about.
Q514 Dr Taylor: I was going to ask
you what sorts of things the public would be prepared to pay for
but you have said you cannot answer that. Is one of your ideas
of the open public consultation you mention in your memorandum
to get at just that, what people would be prepared to pay for?
Mr Hall: Absolutely. We are a
strong advocate for having a system by which the public can contribute
themselves to the debate in saying, "These are the things
I would value, these are the things I would pay for". It
must be a better system to have people contributing to the things
that they think make a difference and that they would personally
value rather than the current system, as I said before, which
has been developed in a piecemeal way, which people do not understand
and which lacks that element of equity.
Q515 Dr Taylor: You mentioned that
charges should be tapered. Would that be on a means tested method
or how would that be?
Mr Hall: I am not an expert in
terms of how one would taper it but it does not seem logical to
me that I could get free prescriptions and somebody else on a
lower income, simply because they were not retired, could not.
Likewise, it would not seem logical to me that somebody who was
unemployed could get access to services at no charge, yet somebody
on a low wage would have to pay the full charge rather than only
part of the charge.
Q516 Dr Taylor: This point has been
made to us by many people. Health savings accounts: are these
one of your ideas and, if so, could you tell us a little about
Mr Hall: Yes. It is premised on
a number of things. The first one is that we tend to have been
a society fixated on delivering the results of ill health rather
than focusing on the benefits of good health. I do not think we
have a society where health and wellbeing play enough of a prominent
role. I think it makes sense to find ways to incentivise people
to take more responsibility for their own health and wellbeing,
and that is easier said than done, of course. One of those ways,
we are suggesting, could be through the notion of the health savings
account, a tax efficient way, in the same way that cash ISAs are
a tax efficient way of saving, that could be used in part or in
whole to contribute either to the consumption of healthcare that
is charged for or for other health related services that are deemed
by the Department of Health or the Government to be beneficial
to health and wellbeing. Whether that is gym membership, whether
that is diet or other elements of exercise is not my area of expertise,
but it is the notion of encouraging people to save and to spend
from those tax efficient savings in that way. We also considered
the concept of a health incentive card. In the same way that commercial
enterprises use cards for loyalty schemes why should it not be
that you could earn points on, for example, buying fruit and vegetables?
That would attract points, and maybe gym membership would attract
points or other things deemed to be contributing to health and
wellbeing could earn points that could be redeemed either in terms
of the health savings account as a cash incentive to that account
or in some other way. I think at the moment there is a complete
lack of incentive to address the issue of health and wellbeing
or saving against the costs of healthcare.
Q517 Jim Dowd: Would you get your
card taken off you for going to McDonald's?
Mr Hall: No, but you would get
points taken off.
Chairman: Thank you very much for that,
Mr Hall. I am quite interested in that type of concept in terms
of a potential lifestyle influence.
Q518 Anne Milton: Mr Hall, the point
you raise about people being unaware of the costs is very valid
and the big bee in my bonnet is prescriptions, that if people
were aware how much the tablets in the bottle cost (a) I think
it would increase compliance because it would encourage people
to finish the course and (b) they would be aware of the huge cost
of some drugs that are prescribed. I wanted to ask you both about
the White Paper and the use of the private and not-for-profit
sectors and whether you feel that in the light of the White Paper
and the mention of those things it is more or less likely that
charges will start creeping in?
Mr Hall: I suspect that it is
inescapable that, because of the demands on healthcare and the
increasing costs of delivering healthcare, charging will be with
us. At the moment my understanding is that current charges accrue
at something like just over a billion pounds a year. That is obviously
a significant sum of money and with the changing demographics
of this country and the growing elderly population I think I am
right in saying that in the next 25 years the number of people
over 70 is going to increase by 70%. That is a fairly frightening
statistic and that debate has already started in terms of pensions
but is probably under-discussed publicly in terms of the impact
on healthcare. I do believe that charging in some way, shape or
form, which retains those elements of fairness and equity, will
be with us in the long term. I think that is likely to increase
rather than reduce, and therefore I think more innovative ways
of identifying what should be charged for and having a mix of
other companies, whether they be not-for-profit companies or commercial
private sector companies making provisions in those areas, is
Q519 Anne Milton: It makes it more
Mr Hall: Yes.