Select Committee on Health Minutes of Evidence

Examination of Witnesses (Questions 520 - 530)



  Q520  Anne Milton: Mr Hurn?

  Mr Hurn: I would concur, that there is a likelihood of charges coming in and that we find at the moment that the NHS reforms have seen an increase in demand. The King's Fund this morning said we are spending more money but we are not necessarily seeing a return on investment. People are going to increase demand and they have also got an increased expectation of what the NHS can deliver. Whether that is sustainable or not is probably not for this debate but poses the question then: if people want it but it is not available on the NHS would they be willing to pay for an extra service, an NHS-plus service? I do think, in view of foundation trusts having to generate an income, having to compete against practice-based commissioning, that there is a high likelihood of charges coming in.

  Q521  Anne Milton: So, on the premise that the demand for healthcare is infinite, which it probably is, with increasing expectations and decreasing tolerance the choices are stark. It is either increased general taxation to an infinite level—demand is infinite—or you charge?

  Mr Hall: That would absolutely be my opinion. It is not just the fact that everybody wants access, understandably, to the best quality healthcare but we are as consumers far better informed now on healthcare than we have probably ever been and the internet has been one of the main reasons for that. I know many doctors who find themselves presented with patients armed with printouts from the internet where they are sometimes better informed than the doctor in terms of what the latest drug or treatment is. We are seeing a huge change in that. I am sure you have probably already had evidence about some of the pharmaceutical developments and some of the new classes of drugs that are now starting to become available, of which Herseptin is just one. There are many more in the pipeline and if research shows that they are as efficacious as Herseptin is that will present even more major challenges to the whole of this country. It is not just about the NHS but also in terms of the affordability of those drugs and with a growing elderly population, and in that same time period I spoke about the 30-34 age group is going to shrink, then the balance of people paying tax to support those in retirement is going to change and that is why I think taxation alone becomes a solution that is in a cul-de-sac.

  Q522  Chairman: Both of you and other witnesses have criticised the current NHS charges. I think the opening shot was that the King's Fund said they were a dog's dinner in terms of how they are at the moment. You were asked earlier to tempt into areas where maybe charging should be expanded or be made more equitable and that leads on from what you have just said. Are there any areas where you would care to speculate on, say, what NHS charges would be like in 10 years' time in healthcare on things that will have charges as opposed to what we know at the moment have charges?

  Mr Hall: I would not, actually, and the reason I would not is that I do not think I am a representative sample of the British public because of my knowledge. I would most heavily rely on undertaking that research and that debate on a much wider scale. If you fit the charges to things people are willing to pay for and would value that could take us anywhere, but if it is what people would be willing to pay for then I think that makes charging acceptable. It is really a question of how much additional resource our health services will need in the future, the willingness of people to pay for those, how they wish to pay for them and the amounts they are willing to pay. Until that research is done we will not know whether the equation balances out or whether we have a gap.

  Q523  Chairman: Mr Hurn, do you have a view on that?

  Mr Hurn: We do. It is difficult speculating into the future and it is probably not our place to do so, but it probably comes to stating what a minimum level of treatment would be and then what sits beyond that that people would like to have as, again using the phrase, an NHS-plus service, in other words that then becomes chargeable and the state would underwrite for the catastrophe, for the inability to afford, but people who can afford would then proactively look at ways of being able to afford that. This is not creating a two-tier system but a basic level of what is acceptable for everyone but the ability for people to step up should they want to and should they be able to afford to.

  Q524  Jim Dowd: The truth is that in 10 years' time the NHS charging regime will be logical, reasonable, rational and understandable because, of course, the big event between now and then will be the publication of the report of this Committee which will deal with it all. Can I just say to Mr Hall first, how do you respond to the Government's avowed intention to put the private healthcare business out of business and what impact would that have on your business?

  Mr Hall: The private healthcare business has been around longer than the NHS so I do not know how realistic it is to assume that we will be out of business, but if we ever do go out of business I do not believe it will be because of the Government; it will be because of our customers. Our customers keep us in business because we deliver products and services that they want to buy and that seems to me the way in which the western world works. You stay in business for as long as you have products and services which are valued by the people who purchase them. 11% of the population value the services that we offer. We give people choice and people exercise that choice and they have done for the last 50-plus years.

  Q525  Jim Dowd: Regardless of the levels of performance in the National Health Service?

  Mr Hall: Absolutely. One of the strange things is that you cannot correlate the number of people covered by private medical insurance with the ups and downs of the NHS. I worked in the NHS in the 1970s when waiting lists were probably amongst the worst that they have ever been and that was during a period when private medical insurance saw the largest growth, not because of the waiting lists but because of the building of modern private facilities where people could get treatment. When those hospitals were completed the numbers stayed the same even when the waiting lists went down, and what we see at the moment are numbers covered by private medical insurance ever so slightly increasing, very marginally, I have to say, but at a time when we have seen the biggest decrease in waiting lists. I do not think it is possible to correlate one precisely with the other. In fact, they do not correlate. It really does come down to the perception of the public and the choices that they make.

  Q526  Jim Dowd: Would it be reasonable to assume that the profile of your policy holders is healthier than the average?

  Mr Hall: That is a very good question. If you look at the socio-economic split of people who have private medical insurance it is probably not what you would expect to see. 18% of the professional employers and managers group have private medical insurance. I think most people would probably believe that that was an awful lot higher than that. 14% of the self-employed have private medical insurance and by and large the self-employed are sole traders or are maybe employing one or two other people. If you go to the unskilled, 6% of those are covered by private medical insurance, most normally through their employer. I would say probably, taking your average of the total population, that ours would be slightly healthier but probably not by as much as one would imagine.

  Q527  Jim Dowd: But that is not because of anything you do. It is just a simple fact. Finally, Mr Hurn, are HSA the same people who are the shirt sponsors of Blackburn Rovers Football Club?

  Mr Hurn: They used to be.

  Q528  Jim Dowd: I do not hold that against you, by the way. In the note that I have here it says that you paid out claims of approximately £166 million in 2004 and that figure was projected to rise by something over 20% to £200 million-plus in 2005. Is the normal rate of growth, above 20%?

  Mr Hurn: No. We have been through a period of mergers and acquisitions which has meant that the group has grown.

  Q529  Jim Dowd: So that is exceptional? What would be the normal growth in payouts?

  Mr Hurn: The normal growth in payouts across the industry when you look at our average claims ratio will sit somewhere between 75% and 85%. That means that most of the money that comes in goes back out—

  Q530  Jim Dowd: No, I am talking about the annual change.

  Mr Hurn: That would be about 6%.

  Chairman: Simplyhealth Group Ltd does not ring a bell with me but I think HSA does and I and my wife may be covered by one of your policies. I declare that right at the end. Can I say to both of you thanks very much indeed for coming along and answering our questions. It has been a very interesting session once again this morning. All three of the sessions have been very interesting and hopefully it is going to help us to come to some conclusions on this matter.

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