After social welfare (£207 billion in 2012/13), the National Health Service (NHS) is the UK government’s second-biggest expense.
One huge bill
However, the big problem for the NHS and other public services is that the British government spends a lot more than it earns. In 2012/13, this overspend is expected to be at least £91.5 billion. This means that our government spends £7 for every £6 it collects in taxes, pushing up our national debt.
As a result of this budget deficit, the government is making cutbacks across the entire spectrum of public-sector spending. Of course, this has a knock-on effect on both the services provided by the NHS and its finances.
NHS rationing and charging
Thanks to the extra demands of our rapidly ageing population, and expensive new drugs and medical technology, NHS spending has soared for more than a decade.
However, from now until 2015, the current NHS spending settlement will rise by just 0.1% a year above inflation (the rising cost of living). Facing rising demand and limited spending increases, the NHS must cope with cutbacks.
Clearly, some healthcare rationing will be necessary, but experts believe that new healthcare charges and higher taxes will be introduced to shore up NHS finances. Indeed, the Institute for Fiscal Studies think-tank has warned that the National Health Service faces ‘a decade of austerity and efficiency savings’.
Within a decade, we could see the end of the NHS as a ‘free at the point of use’ universal health service. For example, better-off Brits might be forced to pay to see their GPs (general practitioners) and contribute towards the cost of non-urgent treatment and services.
NHS Trusts under strain
In addition, more and more NHS trusts are getting into difficulty and becoming unable to pay their bills without financial support by central government.
For some trusts, these financial shortfalls have been caused by expensive Private Finance Initiative (PFI) schemes, first introduced in 1992. Other trusts have suffered due to decades of mismanagement. Also, the global financial slowdown since 2008 has worsened the financial situation of all NHS trusts.
As a result, poorly performing NHS trusts have received over £1 billion in bailouts in six years, according to the National Audit Office (NAO). In total, four NHS foundation trusts and 17 NHS trusts were bailed out by the Department of Health between 2006 and 2012, says the NAO.
These cash-strapped trusts included South London Healthcare NHS Trust* (which got £356 million in the past six years) and Barking, Havering and Redbridge University Hospitals NHS Trust (£195 million of bailouts). In total, 21 trusts are in trouble, with combined debts nearing £130 million. Hence, we should expect even more bailouts in future.
My experience of private medicine
In the years ahead, health spending will be restrained and could even fall in real terms (after taking inflation into account). Also, with public satisfaction with the NHS plummeting, more and more Brits worry about receiving timely, high-quality patient care. Therefore, many of us ‘go private’ by bypassing the NHS to be treated in private hospitals.
For example, from 2008 onwards, I suffered increasing pain and weakness in my right arm. In 2010, my GP referred me a surgeon who recommended spinal decompression. The waiting time for this treatment in my local area (Hampshire) was 18 months to two years.
Thus, I decided to go private and, three weeks later, I had spinal surgery. This operation was a brilliant success and, remarkably, I was back at work with three weeks. Following this treatment, I now have about 30 grams of metal and plastic in my neck spine, which I call my ‘bionic’ implant!
Can you afford private medical insurance?
The total cost of the investigations, surgery and follow-ups for my private treatment came to about £13,000. While I would have happily paid this much to accelerate my freedom from pain, I ended up paying just £1,500 of this bill.
Although I’m a humble freelancer with zero work benefits outside of my income, my wife works for a huge multi-national corporation. Her employer generously provides private medical insurance (PMI) to its employees and their families. Hence, this global giant’s company PMI paid for my operation, less a £500 excess and £1,000 shortfall on surgical fees which I covered.
In other words, nearly nine-tenths (88%) of the total cost was covered by my wife’s company, with me stumping up the remaining 12%.
Then again, PMI isn’t for everyone — and I say this as someone who worked for market leader BUPA (‘Boo-pa’, not ‘Bew-pa) for four years. This cover isn’t cheap, the cost increases every year, plus your premiums soar once you reach 65. Moreover, some people will not buy PMI on principle, as they see private medicine as draining valuable manpower and resources away from the NHS.
How to buy PMI
Then again, if you would like to join more than six million Brits who are already covered by PMI, then tread carefully. It’s crucial to understand that it covers only acute conditions and not chronic, long-term problems and emergency treatment. Also, pre-existing medical conditions are usually excluded, so your past medical history will affect your coverage and premiums, as will your lifestyle habits.
Even with careful shopping around, family PMI cover will cost you hundreds (or even thousands) of pounds each year. The best way to find low-cost PMI is via your employer, because many firms offer group PMI as a valuable employee benefit.
If you or your partner can’t get PMI from work, then shop around for the right policy to suit your needs. Rather than getting separate quotes from BUPA and dozens of other providers, head over to TotallyMoney’s health insurance pages. Fill in a short form and TotallyMoney will connect you with an expert PMI adviser, who can find the right policy for you.
This article is dedicated to Mr Nicholas Boeree, who tragically died in a motorcycle accident in March. As well as being a true British gent, Nick, 53, was one of the world’s leading spinal surgeons.
*The day after going to press, it was announced that the South London Healthcare NHS Trust was to go into administration – making it the first NHS trust ever to do so.