HOSPITAL INSURANCE (LIMITATION AND PUBLICATION) (Hansard, 14 March 1973)

§ Mr. Michael Cocks (Bristol, South)

I beg to move, That leave be given to bring in a Bill to prohibit insurance companies from offering cash payments for hospitalisation only rather than the full period of illness suffered; and to require insurance companies advertising health or illness policies to publish prominently with such advertisements sufficient actuarial and other relevant information to enable the general public to reach a reasonable judgment on the value of such policies. I should like to make it quite clear that the Bill is aimed at cash-in-hospital-only schemes. The question whether there should be private provision in the National Health Service is entirely separate, and I do not wish to raise it. The Bill aims to deal with the cash-only schemes which are bad value, exploiting ignorance and fear.

Since I put down the Title of my Bill I have had support from private nonprofit-making schemes such as the British Hospitals Contributory Schemes Association, the Bristol Contributory Welfare Association and the Private Patients Plan. Only yesterday I received a letter from the Director of the Office of Health Economics, in which he described the cash-only policies as iniquitous.

The Bill is a last resort to obtain some action. Over the past year I have tried through the local weights and measures inspector, the Department of Health and Social Security, the Department of Trade and Industry, the Law Commission, and the Advertising Standards Authority to have something done about advertisements for such policies.

Basically, the cash-only schemes are imported from the United States and pushed at the public through high-pressure advertising. Whole pages have been taken in national and provincial newspapers. Recently, coming out of Victoria Station, I was given some material dealing with the Gold Shield policy of the Life Assurance Company of Pennsylvania. I asked the salesman, "What does it not cover?" He replied, "One or two things."

That brings me to the question of the exclusions. One of the most serious matters is that the small paragraph 1301 describing the only things not covered in each of the policies covers more than 50 per cent. of the beds in the National Health Service, as I found out from an Answer by the Secretary of State for Social Services on 6th December 1971.

The question of the cash value of the policies was dealt with at some length in the Sunday Times last weekend. An example given there was that someone in the age range 19–39 paying a premium of £1.60 monthly for 12 years would pay a total of £230.40, whereas the average stay in hospital during that time would bring a benefit of only £70, entailing a net loss of £160.40. As the age increases the premium increases and the situation gets worse.

The schemes ignore the current trend for hospitalisation to decrease. Figures given by the Department of Health and Social Security for the non-psychiatric patients in hospitals show that in 1959 the average length of stay was 20.1 days, whereas by 1971 it had decreased to 13.9 days. This emphasis in the advertisements, therefore, on hospitalisation distorts the normal care pattern in medicine which is now developing, because there is no payment for convalescence and therefore doctors are bound to be under pressure to hospitalise people longer than necessary.

If it is thought that this suggestion is exagerated, I would point out that I am informed by officials of the British Insurance Association that it has virtually become an article of faith that in any permanent health insurance benefits are limited to three-quarters of income in order to prevent this kind of abuse occurring.

There are particularly undesirable features of certain policies on offer to the public. The London and Edinburgh no-claims bonus scheme offers the return of the premiums after ten years. Anyone who is a motorist knows the torment of deciding whether to continue the no-claims bonus by doing a botched job and making no claim.

Let us imagine someone who has to decide whether to go into hospital for treatment towards the end of the no-claim period under these schemes. It puts an intolerable burden on the patient. It is also contrary to the whole context of modern health education. The Lloyd's policy advertises double benefit for 1302 people going to hospital suffering from cancer, heart disease or from strokes. Throughout the years, the health education work in this country has been directed towards making people treat these diseases as things which are manageable if caught early enough. Yet through the offer of double benefits we see a scare factor being built in, bringing back the old dread and fear of these diseases.

The last intolerable feature I shall mention, in view of the shortage of time, is the Gold Shield policy which I was given at Victoria station. It claims to be the only one to cover people when they go abroad. It says: Illness while overseas can prove highly expensive; Gold Shield policy holders can leave such worries behind when they journey abroad. Yet it will pay only £5 a day for illness when abroad, which is far short of what would be necessary, and even more so in countries like Canada and the United States than in Europe. All this is undermining the work being done to try to impress upon people the need to insure substantially when going abroad for business or holiday. I ask the House to ban these schemes and to make available to the public sufficient information on which they can make proper judgments on whether they are getting value for money.

My attention has been drawn to an article in the Policy Holder Insurance Journal of 9th June 1972. I have inspected the original correspondence quoted. It concerns a lady who wrote off for a London and Edinburgh policy but decided not to take it up after seeking independent advice. She wrote back within 15 days saying that she did not wish to pursue the matter. In spite of this, she writes: Two weeks later I got from them a letter saying they were pleased to know I was joining and enclosed the account for £31.90. I returned this at once and told them once again I was not taking it up. In spite of this they sent me the…account once again. This time I ignored it completely. Two or three days ago I got the other enclosure telling me, as a policy owner, their new address. I have not answered this either. To my mind all this appears to be a form of over-persuasion if not something worse. I could understand them making the mistake once, forgetting I had returned the policy. 1303 But this last letter about change of address is the third time, so I can't help feeling that it is deliberate and, if so, I think they might be hoping that some of these old dears may, after the third letter, think they somehow are liable because in the first place they sent for the policy. I don't like it. Something should be done to make it known. I ask for this racket to be made known to the public and banned.