23 October 2018
An open letter to the Chancellor: why are we taxing people for taking responsibility for their healthcare?
Ahead of the forthcoming Budget, the UK’s four largest private medical insurance have written a joint letter to the Chancellor urging him at a minimum, to freeze the current rate of Insurance Premium Tax (IPT).
As the four principal health insurers in the UK, we represent over 6 million customers who choose to take responsibility for funding some of their own healthcare, in addition to the contribution they already make through their taxes to the NHS.
While we recognise the pressure on public finances and know that tax rises are an option being considered ahead of Budget 2018, we urge the Government to avoid any further increases in Insurance Premium Tax. Insurance Premium Tax is essentially a tax on acting responsibly. As a society we should be encouraging people to take responsibility for making sure that their homes, cars and their health are insured.
The standard rate of Insurance Premium Tax has already been doubled by the Government over the last three years and any further increases risk pushing more businesses and individuals to drop or reduce their health cover, adding further pressure to the NHS.
Insurance Premium Tax increases have already caused important segments of the health insurance market to shrink. Research produced by the Centre for Business and Economic Research (Cebr) in November 2017, commissioned by Bupa, showed that the increase in Insurance Premium Tax from 6% to 12% has already seen nearly 200,000 individuals cancel their health policies.
When businesses or individuals stop or downgrade their health insurance policies, they become more reliant on the NHS for their healthcare needs, including costly care and treatment for conditions such as cancer, heart and joint surgery which their health insurance would have covered. Any further increase in Insurance Premium Tax will exacerbate this, driving more people to cancel their cover and placing even greater demand on the NHS. By increasing Insurance Premium Tax to help fund the additional NHS spending announced by the Prime Minister in June, the Government would, in effect, be giving to the NHS with one hand and taking away with the other.
This is something the public recognise too. Polling conducted by Bupa shows nearly two-thirds (63 per cent) of people say that health insurance allows others to access NHS treatment earlier and over half (55 per cent) view it as important in relieving pressure on the NHS.
With the knock-on repercussions for the NHS, and the wider impact of Insurance Premium Tax on households and businesses across the UK, any increase in Insurance Premium Tax is something that everyone should be concerned about.
We are therefore calling on the Government to commit, at a minimum, to freeze the standard rate of Insurance Premium Tax for the rest of this Parliament.
Alex Perry, Chief Executive Officer, Bupa Insurance Ltd
Mark Noble, Chief Executive Officer, Global Health, Aviva
Keith Gibbs, Chief Executive, AXA PPP healthcare
Neville Koopowitz, Chief Executive Officer, Vitality UK