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PMI premiums set to rise as NHS private spend soars

PruHealth is warning that private medical insurance premiums will increase sharply over the next five years as the NHS increasingly farms out procedures to private hospitals.

Sales director Dave Priestley says 15 per cent of the NHS’s procedures will be carried out in the private sector by 2010, making it the biggest spender on private hospitals and weakening the bargaining power that private insurers have with private hospitals.

Private insurers spend around £1.2bn a year with hospitals but the NHS spending with private hospitals will reach around £3bn in five years. Priestley says this will drive up the cost of healthcare for insurers which will be fed back to the consumer in the form of higher premiums.

He says: “Traditionally, big health insurers have relied on their ability to negotiate with private hospitals to control their health premiums. Once they lose this, insurers will have to introduce strategies to improve premiums such as offering incentives to customers to improve their lifestyle.”

Bupa commercial director Stephen Flanagan says: “I am interested that PruHealth, which is relatively new to the market, says this. We are certainly not losing our negotiating powers. In fact, we put some work out to tender this year which has driven our costs down, benefiting consumers.”

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