Health care that doesn't leave you waiting

Free health care for all under the NHS is a great idea. But waiting lists for non-urgent operations are growing, and those who can afford it often prefer to pay rather than put their lives on hold. The cost of private medical and hospital bills is out of the reach of most of us, so insurance is the answer.

Just over 6 million people in the UK are now covered by private medical insurance (PMI), up from 5.2 million in 1986, according to figures from the Association of British Insurers. "The rise in the market may be due to lack of confidence in the NHS. That's where providers have really scored," says Graham Bates of the independent financial advisers (IFA) Bates & Partners Consulting Group, in Leeds.

The majority of PMI policies are sold as job perks. Bupa, the largest in the sector with two-fifths of the market, says 60 per cent of people covered by its medical insurance are on company schemes. Of those who buy it privately, PMI really appeals to the self-employed who run their own businesses and cannot afford to spend time being on a hospital waiting list, according to Mr Bates.

But private treatment is not just a means to cutting waiting time for non-urgent surgical procedures. Many people use private hospitals even for critical conditions such as heart disease and cancer.

The market for PMI is broad, with over 25 providers in the UK offering some 450 plans. Traditional medical insurers Bupa and PPP Lifetime Care have in recent years been joined by general insurance companies such as Norwich Union, Allied Dunbar and Legal & General.

The cost of PMI has been increasing much faster than inflation, but more competition in the marketplace should begin to slow the pace. Last year, the cost of PMI rose by an average of 9 per cent, according to Les Curson, general manager of the provider Clinicare, who says: "Medical inflation has been going up by more than the retail price index - but that's been the case since private medical insurance started."

One other factor is simply that people are making more claims on their insurance. A decade ago, people would use their insurance only as a back- up, using the NHS wherever possible. "Today people who are covered by PMI do not even think about using the NHS," Mr Curson says.

Also, technology in hospitals is increasingly expensive and this keeps PMI costs high. "There's more eligible treatment that can be done now - for instance, cancers are more treatable, and chemotherapy and radiotherapy may go on a lot longer," says PMI broker John Stevens, of the John Stevens Partnership.

Until last July the over-60s used to benefit from tax relief on any PMI premiums, but this has been abolished. "People within the PMI market thought most of those over 60 with PMI would have to give it up," says Mr Curson. "Premiums for many have gone up effectively by 30 per cent last year, including the annual increase. But from our point of view, we've had a drop-out rate of less than 10 per cent," he says.

Rather than giving up cover altogether, many over-60s have traded down, typically taking on budget plans instead, he says. Others, to reduce costs have taken on a bigger excess, paying the first pounds 200 of any treatment themselves.

Choosing which PMI policy to buy can be a minefield as comparisons are difficult. An IFA should be able to direct you to a specialist broker if he or she is not able to help. "If your financial adviser can't convince you that he or she regularly sells PMI plans from at least three insurers, you should have your doubts," says Mr Curson.

The policies on offer vary widely in the level of cover they provide. Most expensive are the deluxe plans which include dental, optical, maternity and alternative therapy. Next in cost come the comprehensive plans which offer full refunds for most services including out-patient treatment and private ambulance service. Budget plans, the least expensive, are more restrictive with what they cover, often excluding out-patient care, for example.

To give an idea of costs, with Norwich Union Medical Cover, express or comprehensive cover would cost pounds 174.66 per month for a 45-year-old married man with two children under 18. Trust Care Starter - more limited cover with limited hospitals - would cost the same man pounds 43.48 per month. But, when looking at a budget policy, make sure the hospitals you would want to use are included.

"Most people go for the comprehensive plans, because they don't want any shortfalls," says Carole-Anne Hewett of insurance brokers Wilton Spero and Partners.

Take care when applying for PMI that you are scrupulously honest about your medical history, advises Graham Bates. "If you have a family history of something, you should mention it, because the chances are very much higher that's why you need the cover," he says.

"And always remember to contact your insurer before having treatment to ensure that any costs incurred will be covered," adds Mr Curson. That way, you can save any arguments later.

John Stevens Partnership, 01480 411666; Bupa, 0171-656 2000; Clinicare, 01438 741641; Norwich Union, 0800 142142; Bates & Partners Consulting Group, 01132 955 955; Wilton Spero and Partners, 01628 822121. IFA Promotion (0117 971 1177) will provide addresses of three IFAs local to you.