The NHS is in crisis — should I pay for private medical insurance?

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Britain is “broken”. The National Health Service is “in crisis”. These interdependent claims are part of a popular narrative of UK national decline. If you believe the first, you might emigrate or vote differently, actions beyond the scope of this column. If you believe the second, you might pay for private medical care via insurance. This is within my bailiwick.

Personally, I do not think Britain is “broken”. Things that are broken do not function. That is different from functioning sub-optimally.

I was equally sceptical concerning the “crisis” in the NHS. Then I spoke to experts. They agreed that the NHS is not facing a sudden, cataclysmic collapse. But they argued that “crisis” usefully describes the organisation’s multiple failures.

“There is a real worry people will stop trusting the NHS,” says Danielle Jefferies, a senior analyst at the King’s Fund, a healthcare charity. “Patients cannot get the care they need.”

Waiting times from referral to treatment are an example. Recent governments have embraced 18 weeks as a target outer limit for non-urgent hospital procedures. Ten years ago, patients were waiting more than 18 weeks for 340,000 procedures in England. The figure is currently 2.8mn, according to NHS England. That is 39 per cent of procedures compared with 9 per cent before.

The reasons include surging demand, steep costs, under-investment and poor management. The question, to quote Lenin, is: “What is to be done?” That is a challenge for embattled chancellor Rachel Reeves. She needs to find money for the NHS in this month’s Budget.

Answering the question at a personal level also pivots on resources. If you can afford to pay for private treatment, a deteriorating NHS service might increase your willingness to do so.

Spiralling waiting times will be an important factor in the thinking of many readers. Unusually, the UK embraces a hybrid employment model. Many physicians work simultaneously in the public and private sectors. Paying for attention can therefore be a way of jumping a queue.

My family has recent experience of the personal and financial dilemmas. We cheerfully stumped up fees for one of us to receive time-sensitive treatment. I just as happily waited for a couple of years to see an NHS specialist about a less pressing condition. And, of late, I have been wrestling with whether to pay for private medical insurance (PMI).

This covers your costs if you elect to go private. If you are a tidy-minded professional, PMI will be one thing you ponder when you step back from full-time employment, alongside asset decumulation and whether you are finally old enough to book a continental river cruise.

If you worked for a large organisation, free or heavily subsidised PMI was probably an employment benefit. That applied to me when I was a full-time FT employee. When I left, I bought PMI to replace the cover lost.

This year, Bupa clobbered me with a 15 per cent price increase, taking the premium to £224 per month or £2,700 a year. That figure was not far from the average cost of cover bought individually, which is £2,400 according to LaingBuisson, a business intelligence group. My personal circumstances therefore reflected a common conundrum.

I do not like recurring monthly costs, automatic renewals or anything that smacks of price walking. I cancelled the policy. I justified this in two ways. First, I am not ill. Second, I reckoned that if I invested the premiums saved, I would end up with a fund that would help cover any private medical costs.

I then reverse engineered numbers to give my decision some statistical validation. I assumed that I might make a return of at least 5 per cent after costs annually over 10 years on a monthly investment. This would be £224, rising yearly by 2 per cent in line with the Bank of England’s inflation target.

Private medical expenses can be unpredictable — just ask anyone who has paid a fiver for a paracetamol during a hospital stay. As a sounder proxy, I used the £14,000 typical cost of a hip replacement. This is the signature procedure of private sawbones, according to suburban folklore. I inflated the cost at 3 per cent over general inflation, which is around the long-term medical inflation rate.

If I needed a gleaming new ball and socket joint, my fund would cover it five years down the track.

A critical friend would point to big implicit risks to my assumptions. These would include weaker returns and steeper medical inflation. However, I am happy to self-insure. Others in exactly the same situation may buy PMI for “peace of mind”. That would be a credible justification.

PMI that you pay for yourself may be better value than it appears, says Tim Read, head of research at LaingBuisson. Its average cost is more than twice what an employer would pay per individual. But there is a reason for that. “The corporate risk pool is a better mix because it has more younger people in it,” Read says.

The pandemic showed employers the cost to their businesses of delayed NHS treatment for staff, he adds. Workplace PMI schemes have grown fast since. It is a moot question whether this helps or hampers the push to cut NHS waiting times, in my view.

Finally, a confession. I have not actually set up a personal medical fund. Instead, I spent the premiums I had saved on a painting I liked.

It will give me something to look at when I’m waiting for a hip operation.

jonathanbuchananguthrie@gmail.com