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Insuring good health

The private health industry should be cheered by a recent survey that suggested the majority of Tory MPs would support tax relief for private medical insurance. But if the idea is ever to become policy, providers need to show that insured health solutions, more than just a perk, actually make citizens more productive.

The survey of 150 MPs conducted by ComRes for hospital group BMI Healthcare, found that the majority of Conservatives believe the NHS is unsustainable in its present form, and over half want to introduce tax breaks. More than three-quarters of Labour MPs polled opposed the idea.

Whatever MPs think privately, there is still a huge chunk of the electorate that will be opposed to the idea of tax breaks for healthcare so it is perhaps no surprise that David Cameron, according to the Sunday Times, has instructed his Shadow cabinet not to disclose whether they themselves have PMI. If holding such cover is now on a par with experimenting with drugs at university in the list of things politicians cannot discuss, the industry has a long way to go.

That said, tax breaks in the context of the workplace, which are not seen as socially divisive, are being mooted. Where healthcare is offered only to the top echelons of organisations, the case for tax liberalisation will remain problematic. But when schemes are offered to all members of staff, it is much easier to argue that employers should be encouraged to look after their employees.

Some industry lobbyists are now targeting politicians with the idea of tax breaks for healthcare that benefits UK plc through improved productivity. Where private healthcare is simply a perk for those who could get the same or similar treatment through the NHS but choose not to, tax breaks should not be granted, goes the argument. However, in circumstances where private medicine can be a means of earlier intervention, getting employees back to their desks more quickly, there is a clearer argument for fiscal incentives. Encouraging employers to adopt health and well-being policies to improve staff performance is a worthier goal.

The question remains, does the Government think such incentives work? More important, will the money that the Treasury gives away in tax relief be recouped elsewhere through a more successful economy driven by a more efficient workforce?

Doubters will argue that virgin workplace PMI contracts have been few and far between in the last decade and will continue to be so while most employers remain short of cash. Supporters argue that with an incentive to offer them, advisers will be given the tools they need to widen take-up.

Insurers know which parts of their health offerings really drive efficiencies – the ones that reduce their claims, provided employers get on board with the process. However, more could be done to demonstrate return on investment and to integrate what is on offer, particularly where insurers provide both healthcare and group risk products.

Today, these strands of business are often run in completely different locations with separate management chains. The brokers and consultants who deal with such products operate on different renewal periods and with contrasting skill sets.

Yet many employers will be getting overlapping occupational health services, in some cases from the same provider. Integrating these products can only improve the visibility of the efficiencies delivered to UK companies. The more efficiencies that can be demonstrated, the greater the likelihood of gaining tax breaks.

John Greenwood is editor of Corporate AdviserMoney Marketing

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