Public-private partnership proposal by Norwich Union Healthcare

Article date: 21 September 2001

A new model of healthcare provision for the UK, involvingpartnership between the public and private sectors, is being put tothe Government by Norwich Union Healthcare.

The proposal incorporates successful elements of the German,Spanish and Dutch health systems.

But it has also been developed in a way which makes optimum useof the existing and unique advantages of the NHS.

The principle of Stakeholder Health Care was devised by NorwichUnion Healthcare with NERA (National Economic Research Associates).It will be debated at a fringe meeting of the Labour PartyConference on 3 October, held by Norwich Union Healthcare inassociation with the Social Market Foundation, the independentthink-tank.

The key aims of Stakeholder Health Care, which is a long-termplan to improve health funding over the next 10 years, are:

  • To improve patient choice while preserving the fundamentalvalues of the NHS
  • To increase the resources available for the UK healthsystem
  • To ensure fair and equitable access to health serviceregardless of people’s income or state of health

Under Stakeholder Health Care the NHS would act as an insurer,competing with private health insurers to provide a standardpackage of services.

Individuals would pay the insurer of their choice a premiumbased on community rating – ie a premium unrelated to theirhealth risk. Income tax rates would reduce to reflect this.

The system would use some tax-funding to subsidise premiumswhere necessary and to cover premiums for some groups, eg thedisabled, unemployed and those on benefits. Insurers would berequired to accept all applicants.

Tim Baker, commercial director for Norwich Union Healthcare,said: "It is important to recognise that the role of the NHScontinuing as the main provider of health services is fundamentalto the Stakeholder Health Care model.

"But despite recent impressive increases in NHS spending, underthe present system it is difficult for increases in tax- fundedrevenues to keep pace with demand for more and better healthcare.

"Many people are willing to pay for extra health services beyondthose provided by the NHS. Our model reflects this, while makingoptimum use of the experience and expertise of the NHS and creatinga partnership between the public and private sectors which webelieve would bring great benefits to everyone."

The standard package of services funded by Stakeholder HealthCare premiums would be determined by the Government, and would beas wide as possible. Individuals could also pay for additionalservices outside the standard package if they chose.

The funding of the system would be overseen by an independentbody that would distribute resources to the NHS and otherstakeholder insurers on the same risk-adjusted basis, so insurerswould have no reason to prefer healthier or wealthierindividuals.

Although the new system would represent a shift away from afully tax-financed health service, it is envisaged that the NHSwould probably remain the dominant insurer.

"The scheme itself should be seen as a levelling up to a better,one-tier, free-choice system," said Tim Baker.

"It seeks to bring private health insurers into the publicsector and make them available to everyone, regardless of abilityto pay."

Media contacts:
Louise Zucchi, Norwich Union Press Office 08703 666860
Edward Bramley-Harker, NERA 0207 659 8534

Notes to Editors

  • Norwich Union Healthcare was founded in 1990 as the healthcarearm of Norwich Union and now provides a range of income protectionand private medical insurance products to to around 750,000customers. It is one of the largest providers of income protectionand private medical insurance in the UK.
  • National Economic Research Associates (NERA) is aninternational economic consulting firm founded in 1961 to provideclients with practical research and analysis of economic andfinancial issues arising in public policy, regulation, litigationand management. In the health sector, NERA has worked acrossEurope for governments, policy makers and private sector clients,providing advice on all aspects of health sector financing andreform. NERA employs some 300 professional economists in officesin the United States and in London, Madrid, Sydney andBrussels.
  • CGU and Norwich Union merged on 30 May 2000 to create CGNU plc- the UK's largest insurance group and one of the top-five lifeinsurers in Europe with substantial positions in other marketsaround the world, making it the world's sixth largest insurerbased on gross worldwide premiums.
  • CGNU's principal business activities are long-term savings,fund management and general insurance, with worldwide premiumincome and retail investment sales from ongoing business of over¬£27 billion and assets under management of more than ¬£200billion.
  • From October 2000, the combined life and pensions, generalinsurance and retail fund management businesses in the UK operateunder the Norwich Union brand, while the institutional investmentbusiness operates under the Morley Fund Management brand.
  • Member of the General Insurance Standards Council
  • Norwich Union’s news releases are available on thissite
  • A selection of images are available from the CGNU Newscastsite at

For life and pensions media enquiries: 08703 666873
For all other media enquiries: 08703 666868

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