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The Changing Face of Private Medical Insurance

by David Megginson(more info)

listed in insurance, originally published in issue 22 - September 1997

What is PMI?

Private Medical Insurance (PMI) is a form of insurance which pays for the cost of medical treatment provided to a patient privately, as opposed to treatment either paid for by the patient or provided free of charge by the National Health Service (NHS). The private treatment funded by PMI is not a substitute for treatment received free under the NHS: PMI pays for therapeutic intervention where the prognosis is a complete cure, and as such, unlike the NHS, it does not provide for the cost of treating chronic or incurable conditions.

Medical welfare and provident associations, the precursors of modern day PMI providers, have been in existence much longer than the NHS, which only came into existence in 1948. However, the recent increase in public awareness of PMI has been largely fuelled by perceived shortcomings in the NHS, mainly relating to the problem of waiting lists for certain medical procedures and the little-discussed but widely-recognised issue of treatment rationing. Both of these problems result from the conjunction of the infinitely elastic demand of consumers for immediate, high quality, modern health care and a finitely-funded national health care provider. PMI exists within this gap, making health care available without eating up tax revenue, which can then be used to support a national health service for those who will not or cannot pay for private cover.

Cost and Effectiveness

The two most important economic determinants in the provision of any form of health care are the funds available to the health care provider and the price that is paid for the treatment. While treatment in the private sector is funded in a completely different way to the NHS, the underlying costs of treatment are similar. No matter who pays for the treatment, the cost must be reasonable and the treatment appropriate, by which is meant 'medically effective'.

Governments and the health care funders have struggled to find ways of measuring effectiveness. The coming together of economists and physicians has resulted in the consensus that health care strategies must be measured and judged in terms of the costs and benefits and in terms of an individual's overall health and well-being. This is a considerable shift from the position even thirty years ago, when the popular definition of good health was much more narrowly defined as absence of illness. The result of this changed attitude has been a growing awareness of the benefits of a more holistic approach to the provision of health care.

The Employer as Consumer

Coupled with this perceptual shift has been the rise is awareness amongst employers of the costs associated with absenteeism due to illness, as well as those arising directly as a consequence of the nature of the work concerned. The human resources departments of medium and large sized companies are now expected to monitor both the level of individual health and the effect of the company environment and culture on general health levels across the organisation. PMI providers are increasingly required to provide more than just insurance cover for acute illness episodes: they must provide statistical analysis of illness patterns within the client company, and help to develop strategies to minimise illness-related absence, a role closer to that of an occupational therapist than an insurance company. Occasionally amusing examples of a management's concern for employee health are reported: more than one firm in the City of London employs specialists in head and neck massage to relieve the tension of high-stress sedentary employees who spend hours in front of dealing screens. The management's motivation in these cases is largely economic: lower stress levels give rise to fewer mistakes and reduce the risk of stress "burn out", making the employees more productive.

Measuring Effectiveness

These shifts in attitude are being felt both by the providers and recipients of health care. In both cases, it is the concept of effectiveness which is the key and, by extension, the cause of increasing acceptance (or at least reducing scepticism) by health care professionals and patients of non-conventional approaches to health.

Evidence-based medicine, which seeks objective criteria to determine effectiveness, and standard medical protocols, by which diagnosis and treatment follow strict guidelines based on past evidence of effectiveness, are being applied to both new and old therapies. Where a therapy passes these tests, it becomes part of the accepted arsenal available to doctors, and both public funders (the NHS) and private insurers will pay for treatment. Where a therapy fails, treatment will not be funded except out of the patient's own pocket. A glance at the Research Updates printed in Positive Health (see pages 53–57) shows how much activity there is in putting complementary therapies to the effectiveness test, and there is a growing number of past and continuing studies which support the view that non-conventional medical therapies can play a significant part in curing, or at least alleviating the symptoms of, a wide range of illnesses.

Responding to Consumer Demand

To followers of non-conventional medicine, none of the above will come as a surprise. What may come as a surprise, however, is that PMI companies, who, since they are effectively paying for treatment out of their own funds might be considered much less amenable to spending money on new therapies, are increasingly accepting to cover the cost of a range of non-conventional treatments for their insured members.

In part this trend reflects the general shift in attitude of the medical profession towards non-conventional therapies. In part it reflects the changing attitudes of insurance companies to their customers.

Insurance companies are becoming more "consumer-focused". Many PMI companies now have medical help lines, usually open 24 hours a day, which insured members can contact not only for claims-specific matters, but for general enquiries about their state of health and any medical concerns they might have. In addition, many PMI companies now openly promote the fact that they will pay for non-conventional medical treatment.

Opening and Shutting the Gate

Given these developments, one might expect insurers to be facing a tide of non-conventional treatment claims, but this is not the case.

There is a control mechanism which operates both in the NHS and the private health care system: the "gate-keeper". Under PMI, just as in the NHS, it is not possible to see a consultant or other specialist without first being seen by a general practitioner (GP). The patient can only obtain further treatment by onward referral, and this applies equally to referral to a non-conventional therapist. This highlights the crucial role of the established medical profession in allowing a patient access to complementary medicine. Where there is insufficient evidence (or where there is evidence that is insufficiently disseminated throughout the medical community) of the efficacy of a complementary therapy, it will be down to the personal view of the referring GP or specialist whether the patient receives funded complementary treatment.

My own experience as a PMI provider at Healthsave is that many GPs and consultants have for some years been keen to refer patients for non-conventional treatment but have previously met resistance from most insurers. Even in the case of those doctors who have not made such referrals, the gate-keeper role is not one which operates consciously to prevent patients from receiving funded complementary treatment; often the referring doctor is not aware that the patient might wish to receive such treatment, and will not usually suggest it without prompting. My advice to patients who strongly feel that they would benefit from such treatment is that they should ask the GP or specialist whether the proposed therapy would be beneficial, and if so suggest that they be referred (if only on a limited trial basis). Nor should the patient assume that the GP or specialist will automatically know to which non-conventional practitioner the patient should be referred; if the patient already has someone in mind, this should be made clear. Having been referred, the patient should let the insurer know (before treatment commences) so that the progress of the treatment and its outcome can be monitored. Patients are frequently surprised to discover that they can take such responsibility for their own treatment.

The Way Forward

As should be clear from the foregoing, PMI companies are purchasers of health care for value – that is, they want to have evidence that the therapy is in the best interests of the patient, that it is cost-effective and that the selected practitioner is competent and qualified.

Referring doctors and conventional medical specialists are looking for the same assurances. Only those practitioners who follow the lead of the mainstream complementary and alternative medical bodies and arrange themselves into registered organisations, with stringent admission criteria and rigorous training, will be able to provide standard treatments the effectiveness of which can be measured and hence justified on medical outcome and cost grounds. Unaffiliated practitioners who insist on working without recognised accreditation will not benefit from the increase in funded referrals and will find that their client base will be limited to patients who pay for their treatment themselves. As to accreditation, the new recognised national bodies will have to open themselves up to rigorous and sceptical examination: they will have to furnish the evidence that their therapies are objectively measurable and work.

We are by no means entering a golden age of non-conventional medicine, funded to a significant degree by the generosity (or more precisely, competitive necessity) of insurance companies, with alternative and complementary practitioners having only to sit back and wait for the patients to queue up. Yet the prospects for non-conventional medicine must be positive given that even sceptical insurance companies are changing their views. The extent and speed with which complementary and alternative medicine enters the medical mainstream will be largely the responsibility of unified and professionalised practitioners. There cannot be a more encouraging message than that your future is in your own hands.

Case Studies

Following a road traffic accident, a woman patient underwent surgery to the jaw, but was left in severe post-operative pain. Follow-up treatment from a referred acupuncturist eased the pain, enabling the patient to rest and make a full recovery much more quickly.

A patient suffering from osteo-arthritis of the neck was initially receiving conventional physiotherapy, but found that this exacerbated the symptoms. After seeing a Consultant Rheumatologist, she was referred to a chiropractor for remedial massage. Symptoms have improved and treatment is continuing.

Conventional treatment received by a young girl suffering from a hereditary skin condition alleviated acute symptoms but did not reduce the frequency or severity of attacks. Referral to the biological medicine therapist previously used by the girl's father has resulted in significant improvement and reduced acute episodes. The girl's mother is also treated by the same practitioner for a thyroid condition.


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About David Megginson

David Megginson is the Executive Chairman of Healthsave. He can be contacted at Healthsave, 20 Regent Street, London SW1Y 4PZ. Tel: 020-7451 1140, Fax: 020-7930 3010.

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