Benefits provided by not-for-profit healthcare providers are saving the nation’s around £1bn a year in NHS and welfare funding, according to a new report.
Analysis by actuarial consultants OAC, part of the Broadstone Group, looked at the benefits provided by mutual healthcare organisations offering cash plans, PMI and income protection policies — and what these would have cost if policyholders had relied on the NHS or sickness benefits instead.
The NHS is by far the biggest beneficiary. OAC calculates that last year the cost of treatments provided privately via these plans would have cost the NHS £629m. In addition there was a further £90m saving from the rehabilitation and accelerated recuperation treatment provided on these plans further reducing demand for the NHS’s overstretched services.
When it comes to welfare savings, OAC estimates that benefits paid via income protection polices have resulted in £28m of savings, that would otherwise be paid by the state via sickness benefits. It adds that rehabilitation benefits resulted in a further £7m of saving through earlier return to work.
The report also factored in the potential savings made by employers, in terms of reductions in sick pay, and other costs associated with early return to work. It estimates together these stand at £65m.
Meanwhile it says that that the benefits paid out by these policies have resulted in individuals saving around £137m – in terms of retaining an income through insurance benefits and an earlier return to work.
Collectively these add up to savings of £956m.
OAC adds that the sale of these healthcare policies also generated around £98m for the government via insurance premium tax. It adds that if IPT were abolished for these policies, they would become more affordable – and more attractive to employers and individual alike.
It estimates that a 20 per cent increase in sales could potentially add a further £65m a year to the savings made via the NHS and welfare state, even after allowing for the loss of IPT revenue.
OAC head of consulting Cara Spinks says: “With pressure on public health services like never before, this report provides a timely update on the valuable contribution to public health finances given by the mutual and not-for-profit sector.
“Through the provision of health protection policies to employers and individuals these long-standing organisations boast a strong heritage of protecting workers from the impact of ill-health, unemployment or old age.
“These (many small) mutual organisations continue to operate effectively in the healthcare and protection sectors today. They do this by complementing the NHS and welfare state to actively support employers in helping their employees to remain healthy.
“We have estimated that cost savings to the NHS, welfare state and employers arising from the provision of health protection policies during 2022 by the group of organisations covered in our analysis to be almost £1bn. This demonstrates the very valuable, and sometimes overlooked contribution to public health services made by this sector.”