Headlines: May 15th, 2001

A new study has vindicated – as a financial measure – the Labour government’s decision to abolish a subsidy on private medical insurance (PMI) for those over 60.The dropping of the subsidy, in 1997, led to an increase of nearly 30% in the cost of PMI for those affected.

It was feared that many older people may drop out of the scheme, and that this would lead to an additional burden, and expense, to the NHS.

New research by the Institute of Fiscal Studies, financed by the Economic and Social Research Council, and published by the King’s Fund, shows that the decision will have saved the government money.

Writing in the Kings Fund’s journal ‘Health Care UK Spring 2001’, Carl Emmerson, Christine Frayne and Alissa Goodman find that only 4000 people dropped out of PMI, and while these will have led to an increase in demands on the NHS, the cost of treating additional patients is far less than the 135 million pounds saved.