What the Treasury can learn from the Private Health Insurance Companies
Civitas, 4 October 2004
Today’s Times carries a report that a private health insurance company, PruHealth, intends to charge a lower premium to customers who maintain a healthy life-style by not smoking, regularly visiting the gym, etc.
Surely, the Treasury could and ought to consider offering comparable kinds of rebate in connection with NHS charges? At present the Government seeks to encourage healthier life-styles but without offering the taxpayer any real inducements to do so beyond making smokers and drinkers pay extra taxes for indulging their taste for tobacco and alcohol.
Surely there are many other ways people can improve their state of health besides choosing not to smoke or drink beyond moderation.
Especially as an aging population will have to continue in paid employment longer than earlier generations, those who make the effort to look after their health by sensible diet and exercise deserve some compensation beyond their simply enjoying the opportunity to work longer and contribute more to the Treasury.
The only real issue is whether such differential charging would be unduly intrusive into people’s privacy. Surely, however, there are ways to incentivise the adoption of healthier life-style that could not be so considered.
Would you want to? I mean we are talking about another infrastructure, run by the state, to figure out whether we maintain a healthy lifestyle or not. Chances are it may not be done efficiently.
Isn’t it better to just continue to raise the price of taxes on fags and booze. (and while we’re at it, legalise drugs and tax them too.)
From an equity standpoint, we will also tend to discriminate against those with natural disadvantages for which they can never be compensated (like a tendency to diabetes, or some such). Any proposal based on risk-factors, especially in our social medicine, will make life still tougher for such folk.
I lived and worked in tiny Bermuda for 32 years and have extensive experience of the system of private health insurance that prevails there. There are several Health Insurance companies that compete for the business and as a group they negotiate with the medical professions for the scale of fees enjoyed by the latter. The whole process is monitored by the Bermuda Government.
There are two different approaches to the quotes offered to the business community, one is to spread the costs evenly over the customer base and the other is to base individual company quotes on the age spread.
The two systems worked very well together and clearly each company would take the quote that best suited them. My own experience as the officer with the responsibilty of keeping tabs on the cost of health insurance for my company, was that there was very little difference.
Whilst these different approaches made sense in the context of private insurance, I can’t see how it would be practicable in the case of the NHS. In any case I am opposed to either government or employers attempting to dictate the lifestyles of individuals. There is a cost and it has to be met and I am still of the opinion that private health insurance would provide a better service at a comparable cost.