Examination of Witnesses (Questions 520
THURSDAY 9 FEBRUARY 2006
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 leveldemand is infiniteor 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
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,
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.