Those fortunate enough to afford PMI don’t expect sympathy from the wider public at the idea that increases in Insurance Premium Tax (IPT) are going to push up premiums even further. But actually we think we should all care about the government’s favourite stealth tax and the potential impact on the health sector especially the NHS.
History shows that increases in taxation on the private sector drives more people to the NHS. In 1997 the then labour government removed the 23% tax relief from PMI premiums and the market has been shrinking ever since. At the time the private sector treated 28% of all hip operations, 20% of all heart conditions and 20% of all acute conditions*. Today only around 10% of the population have PMI and clearly the slack has been taken up by the NHS.
Today’s Tory government are doubling the IPT rate to 12% this year and there are fears they want to take it up to 20%. If the threatened increase led to further retraction in the number of people with medical insurance then the whole viability of the private healthcare system could be challenged pushing more demand to the NHS.
All of us need to make our voices heard to make the government aware of the ‘potentially catastrophic impact’ of making PMI unaffordable. Our trade body, The Association of Medical Insurers and Intermediaries (AMII) will shortly launch a petition to force a parliamentary debate. We’ll be encouraging all of our clients and contacts to sign it.
In his opening addres at AMMI’s recent AGM Stuart Scullion, chairman [pictured] said:
“We need to attract 100,000 signatures for the topic to be debated in Parliament, which we must achieve within 6 months”
He added:
“We need to fight our corner and lobby anyone and everyone to enlist support in getting this message out.”
Also speaking at the AGM, Alex Perry, CEO of Bupa Insurance Ltd, said:
“IPT on health insurance is unfair and counter-productive. The government’s loading of tax onto health insurance has already seen the number of people who pay for health insurance themselves shrink by a third since 1997. This means more than half a million more people fully dependent on an overstretched NHS. Further increases in IPT will push some people to the limit of what they can afford.”
Life Insurance is free of IPT and we think PMI should be too as it is in many developed economies. At Lesson Moore we are going to be supporting this campaign with our usual vigour.
* Source: http://hansard.millbanksystems.com/commons/1997/jun/16/private-medical-insurance-tax-relief
