How the NHS will pay for new super-bundles of super-low cost private insurance to save £20bn by 2030
The NHS will be spending more on private insurance as part of a £20 billion overhaul of its health service by 2030, a new study has found.
The study by consultants McKinsey and Co. has found that by 2030 private insurers will account for 80% of NHS spending.
The change in policy will mean the cost of private insurance will drop from £1,200 per head to just £895 by 2030.
The cost of covering private healthcare is falling due to rising costs and the number of people being covered by private insurers has increased, says the report, Healthcare for All: Why NHS spending is falling and how we can save £200bn by 2025.
The report is the result of a year-long work by McKinsey’s health consultancy and will be published in a special issue of the McKinsey Global Institute.
It says: We expect that by 2040, the number that will be covered by a private insurance scheme will be significantly lower than the number who currently do.
The number of private insurers that will provide coverage will also fall by about half compared with 2020.
This will make it easier for NHS leaders to justify increasing their investment in healthcare by the end of this decade, the report says.
A key point is that the cost per person will fall by almost £5,000 by 2030 compared with current levels.
This will help pay for private insurers to cover more people and lower the amount of money that is needed for the NHS to continue to grow.
“Private insurers will be the key driver of change in NHS spending,” said Dr Michael Smith, chief executive of McKinsey.
NHS leaders had been expecting the number to fall because they were worried about rising costs.
Healthcare for All suggests that this is unlikely to happen.
Dr Smith said: We see an opportunity here.
The NHS needs to be able to pay for its healthcare in a way that is sustainable over the long-term.
“As we move towards this goal, we must ensure that the NHS is sustainable for the future,” he said.
Private insurers would still be required to provide NHS services in some areas, such as maternity care, and for a small number of services, such for those with mental health conditions, which would be less than half of NHS costs now.
However, the changes would mean that private insurers would be able pay for their own services more cheaply.
And this will mean more money coming into the NHS.
It will also mean that more money will be available for the private sector to invest in their business, with a boost to the economy, said Dr Smith.
By 2040 there will be around 15 million more private insurance companies in the UK, compared with the current number of 13 million.
The McKinsey report said that by 2025 private insurance spending would be on average about £8,000 per head, up from £7,500 in 2020.
In the UK the number is expected to be higher than that, with around 3 million people being insured.
However, the McKinseys report found that private insurance covers a lower proportion of people than Medicare, which covers about 85% of the population.
Its a win-win for the health service, said Mr Smith.
“The NHS can be healthier and more efficient by being able to access the resources it needs,” he added.
For more information:Healthcare.gov.uk/news-and-analysis/news/nhs-health-funding-declines-to-rise-due-super-bundle-of-superlow-cost-private-insurance-to—save—2040