Growing waiting lists and investigations into hospitals with higher than average death rates do little to instil confidence in the NHS. But while it's possible to pay as you go for private treatment, four million people in the UK prefer to remove the risk of unexpected bills by taking out private medical insurance.
Plans can cover anything from consultations and diagnostics right through to surgery and treatment for cancer. Although the insurers have developed a range of different plans, with many offering pick-and-mix menu-based options, plans usually split into three types depending on how much cover they provide for outpatient treatment.
Tim Smithers, healthcare manager at medical insurance adviser Healthcare Partners, explains: "Plans are either budget, which mainly cover inpatient treatment; mid-range, which will also include between £500 and £1,500 of outpatient cover; and comprehensive, which give you a full refund on both inpatient and outpatient treatment."
To illustrate how the cost of cover stacks up, he says a couple in their late fifties taking out cover through PruHealth would pay £146 for a budget plan, £232 for mid-range and £263 for a comprehensive plan.
While your budget may dictate the level of cover you select, Stuart Scullion, managing director of medical insurance adviser The Private Health Partnership, recommends thinking about which areas of your health you would be most concerned about.
"If you're worried about the big bills, but happy to pick up the tab for a trip to a consultant or some blood tests, a budget inpatient-only product is worth considering. You'd probably only pay £150 to £300 to see the consultant and get the tests done privately but you could easily save this on your insurance premiums," he explains.
Likewise, a diagnostics-only plan could be an option if you're happy to access the NHS for treatment but don't want to be left waiting to see a consultant and get the tests to find out what's wrong with you.
For example Aviva offers a plan – Speedy Diagnostics – which covers all your scans, tests and consultations up to the point of diagnosis. As a result, the premium is lower, with a 25-year-old paying £17.66 a month compared to £60.91 for its most comprehensive plan.
While it's possible to remove all sorts of treatment from a plan, one of the most emotive areas is cover for cancer. With fears around the availability of some of the cancer wonder drugs on the NHS, many people look to their medical insurance for reassurance that, if they get the disease, money won't be an issue.
"Cancer is the biggest health worry for many people," says Dr Doug Wright, medical director at Aviva UK Health. "Although it only makes up around 6% of our claims, as these can be for significant amounts, it's exactly what you want insurance for."
But, if it is a concern, it's essential to check the cover on your plan as it can vary significantly. While the top four insurers – Axa, Aviva, Bupa and PruHealth – offer the option to take out comprehensive cover that includes everything from radiotherapy and drugs right through to palliative care; other insurers take a much more restricted approach.
Scullion explains: "There are potentially huge costs involved with cancer treatment, which ultimately end up being passed on to policyholders' premiums. To avoid these potential price hikes, some insurers put a cap on the amount of cover or impose time limits."
As an example, Simplyhealth offers cover for heart and cancer treatment as an option on its Simply Personal Health product. Select this and you can choose to have full cover or a £50,000 lifetime limit for any cancer treatment, with the insurer working with your specialist to ensure a smooth transition into NHS care if you reach the lifetime limit.
How premiums can vary
|25-YEAR OLD||40-YEAR OLD|
|Healthier Solutions plus £100 excess||£56.34||£81.54|
|Healthier Solutions plus £500 excess||£45.68||£66.11|
|Healthier Solutions plus £1,000 outpatient limit (mid-range plan)||£41.41||£59.94|
|Healthier Solutions with no outpatient cover (budget plan)||£29.23||£42.32|
|Healthier Solutions with six-week option||£48.72||£70.51|
Source: Aviva UK Health, premiums based on someone living in Northampton
If it is important to have comprehensive cover – whether for cancer treatment or other areas of your healthcare – but if the price is too high, there are other ways to keep the cost down. Excesses, where you agree to pay the first part of any claim, are a popular option and range from £25 to more than £500. "An excess can work well if you've got some spare cash to cover this commitment," says Simon Miller, head of marketing for individual health at Axa PPP healthcare.
As an example, on Axa's Health Select product a 35-year-old in the South East would pay £66.98 a month for a comprehensive plan. Add a £100 excess and the price drops to £59.47, or to £53.59 for a £250 excess.
Another money-saving option is a six-week wait plan. This is offered by Aviva and Axa and covers treatment, providing you would have to wait at least six weeks to receive it on the NHS. If you're happy to know you'll always have no more than six weeks to wait, the savings can be significant. Axa's 35-year-old, for example, would see his monthly premium drop from £66.98 to £50.24.
A no claims discount (NCD) can also squeeze your premium. Providing you don't make a claim, you can see your premium reduced by 65% or more. However, Smithers isn't a fan of cutting costs this way, saying it could deter you from using your cover. "If you make a claim, you can see your premium jump right up as a result of the NCD. Some insurers, including April and Exeter Family Friendly, don't use them," he explains.
Another insurer initiative that could help to reduce costs is open referral. Traditionally, your GP would recommend a consultant, but several insurers including the two largest – Bupa and Axa – now cut out the GP and provide their customers with a choice of two or three consultants themselves.
"We offer it as an option to our individual customers," says Tony Wood, sales director at Bupa Health Funding. "All the consultants we recommend have been assessed for their quality but also their fees. As a result, we can guarantee that our customers won't be hit with a shortfall."
As well as ensuring you won't have to pay a shortfall, open referral can lead to savings on premiums too. Wood says the level of savings will depend on your location but is in the region of 5%.
But, while he can see the financial merits of open referral, Scullion prefers policyholders to have more choice. "The problem with this approach is that it removes choice. Someone might want to see the same consultant they'd seen before or that a friend had recommended," he says. "That said, with premiums rising by as much as 10% each year, I do expect to see this approach more widely adopted."
So far, insurers are being careful to ensure customers do retain this choice. Although Axa's Health-on-Line proposition does restrict both the hospitals and consultants policyholders can use to make its cover more affordable, both Bupa and Axa allow their individual policyholders to choose which consultant they see.
"If a policyholder wants to see a consultant recommended by their GP, we're fine with this but we will draw their attention to the potential for a shortfall if this has happened to other policyholders," says Miller. "Some people don't mind paying extra but others prefer to see one of the consultants we recommend as they know all their bills will be paid."
And while this might be one of the more recent developments in medical insurance, as the NHS undergoes further change, it's likely that new product options and ways to access private healthcare will develop.
Using both medical and insurance terms, your policy could be full of jargon. Here are some of the common terms explained.
- EXCESS: the amount you agree to pay towards a claim. It usually only applies once in a policy year but could be applied to each claim or across a 12-month period.
- INPATIENT TREATMENT: treatment that requires an overnight stay, or longer, in hospital.
- OUTPATIENT: treatment in hospital that does not require an overnight stay.This could include seeing a consultant or undergoing tests.
- NO CLAIMS DISCOUNT: aka an NCD, this gives you a discount on your premium if you haven't made a claim in the previous year, exactly as it would on your motor or home insurance.
- OPEN REFERRAL: a process whereby your insurer provides you with a choice of consultants rather than leaving the decision up to your GP.
- SIX-WEEK WAIT: an option that allows you to receive private healthcare when the wait for NHS treatment is six weeks or longer.