Labour tax on private care could wreck NHS

THE NHS will be swamped with hundreds of thousands of extra patients if Labour presses ahead with plans to raise tax on private medical insurance, experts warned last night.

The move, outlined in the party’s own policy documents, would bump up premiums for millions of Britons.

Jeremy Corbyn wants to use the extra cash to increase NHS funding and pay for free hospital car parking. But insurers and medics last night claimed the tax grab was a ‘naive and short-sighted move’ which would have ‘catastrophic’ effects on both patients and the health service.

Labour is thought to be considering raising the tax on private medical cover from 12 to 20 per cent, bringing it in line with the rate of VAT.

That would result in 250,000 Britons ditching private policies in favour of the NHS – at a cost of millions a year in extra care and administration costs, according to an independent forecast.

Although perceived to be the preserve of the wealthy, many private medical insurance customers are older individuals on limited pensions, said Alex Perry, chief executive of Bupa Insurance UK. He said: ‘If they drop out because they can no longer afford it, then they become solely reliant on the NHS for their care.

‘If they do need treatment, they will then have to wait for longer and will have less choice over how and where they have the treatment.’

The knock-on effect could mean ‘longer waiting times for everyone’, he added. Mr Perry said the total number dumping private health cover could even top 250,000 as the figure – produced by the Centre for Economics and Business Research (CEBR) consultancy – does not include millions of corporate health policies.

He said the UK already had ‘punitive’ health insurance taxes – with only Greece having higher levies in Europe. Consultant knee surgeon Ian McDermott, of London Sports Orthopaedics, called Labour’s plans ‘naive and short-sighted’ as the private sector helps relieve the NHS of the burden of work such as hip or knee replacement surgery.

‘Any disincentive towards people accessing private healthcare will only increase the number of patients relying on the NHS instead, thus increasing NHS waiting times and over- burdening the NHS system even more,’ he said.

Stuart Scullion, of the Association of Medical Insurers and Intermediaries, added: ‘Cost is the biggest reason for cancelling medical insurance. Further tax increases could be the straw that breaks the camel’s back.’

The CEBR report, commissioned by Bupa, found each one per cent rise in tax on private premiums generated £37 million in extra tax revenues. However, it also added £21.5 million to NHS costs.

Mr Scullion added: ‘ Potentially there is a net financial loss to the NHS because it won’t receive all the extra money raised in tax – but it will incur all the increased cost of having to treat people who no longer have private health insurance.’ Labour declined to comment.

‘It means longer waiting times for everyone’