The determinants of private medical insurance prevalence in England, 1997-2000

OBJECTIVE: The aim of this paper is to identify the factors that determine the prevalence of private medical insurance (PMI) in England. DATA SOURCES/STUDY SETTING: Secondary data sources are the British Household Panel Survey (BHPS) 1997-2000, Laing's Healthcare Market Review 1999-2000, the United Kingdom (U.K.) Department of Health's National Health Service Waiting Times Team, and the Work Force Statistics Branch of the Department of Health. STUDY DESIGN: Logistic regression models for panel data were used to compare non-PMI subscribers with individual subscribers and those with employer-provided PMI. DATA COLLECTION/EXTRACTION METHODS: The BHPS data are collected by the Institute for Social and Economic Research at the University of Essex. Other data used were collected by Laing and Buisson and the U.K. Department of Health. PRINCIPAL FINDINGS: Individual PMI is more prevalent among the well-educated and healthy. Income, age, sex, and political preference are key determinants of PMI prevalence for both individual and employer paid PMI. Individuals are also likely to reflect on information with regard to waiting times in deciding whether or not to purchase PMI cover. The withdrawal of the tax subsidy in 1997 to PMI subscribers over 60 years of age did not impact on their rate of withdrawal from PMI coverage relative to the rate among all PMI subscribers, but may have discouraged potential new subscribers. CONCLUSIONS: Current trends in the PMI market suggest that, over time, individually purchased PMI is likely to be partially displaced by PMI purchased as part of a company-based plan. However, having PMI is linked to economic factors in both groups, suggesting a similar segment of the population valuing the responsiveness that PMI provides. Geographic factors relating to waiting times and supply-side factors are associated with both individual and company-based PMI. The withdrawal of the tax subsidy to individual subscribers older than age of 60 resulted in a significant decline in the demand for PMI. In particular, the number of new subscribers in this group declined substantially.