Hope of lower health premiums grows: The Government is moving to abolish the price list for private operations, reports Caroline Merrell

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THE Government's decision to scrap the British Medical Association's list of prices for operations carried out privately could lead to lower medical insurance premiums.

Last week, the Monopolies and Mergers Commission said that there was no proper price competition between doctors. Neil Hamilton, the corporate affairs minister, said: 'There is a complex monopoly which . . . enables consultants to charge higher fees than would otherwise be possible.'

Forty per cent of the cost of private insurance is linked to the price charged by consultants. Other costs that affect premiums include hospital beds and expenses of the medical insurer. The list cost for the removal of impacted wisdom teeth under anaesthetic is pounds 440, while the list price of a hysterectomy is pounds 885.

The cost list was introduced four years ago as a guide to prevent some consultants charging exorbitant fees. But the question is whether a 'standard' price is discouraging competition. Prices on the list have risen by about 30 per cent over two years. Many medical insurers have also suffered rising claims, which have pushed up premiums.

The MMC report also said that patients should be told what a consultant would charge before they opted for a particular one.

The private medical insurers believe that the Government's move to ban the list will give them a tool for controlling premium inflation, which has been 10 per cent above general inflation for two consecutive years. Tim Baker, commercial director at Norwich Union Healthcare, said: 'We now have an opportunity to put downward pressure on fees.'

He said that private medical insurers would eventually only use consultants who agreed to work within an agreed price range. 'The vast majority of consultants do work within reasonable limits - only 10 per cent go above that amount.'

Bupa, the biggest provider of health insurance, also thinks that the Government's move will help to keep down costs. The insurer is committed to reducing its costs by 20 to 30 per cent through a variety of methods.

For example, it has radically increased the percentage of operations that do not entail an overnight stay in a hospital. Now 40 per cent of operations carried out under Bupa are on a day-care basis.

However, the BMA thinks the MMC move could force consultants' fees up. John Chawner, chairman of one of the BMA's consultants' committees, said: 'It will be up to the individual doctors to work out a price - a world-famous surgeon will charge more than someone doing varicose veins in Bangor.'

There are about 50 different private medical plans on the market. However, more than 80 per cent of the six million people covered have plans from Bupa, PPP, WPA and Norwich Union Healthcare. Premium rates depend on the benefits offered, the general health of the client and the area he or she lives in.

Some of the plans only trigger private care if the waiting list is over six weeks. Otherwise the operation will be carried out under the NHS.

Anyone who wants to buy a plan can go to an independent financial adviser who specialises in the market. Karen Gamble, healthcare manager at Sedgwick Noble Lowndes, warns that some companies increase premiums unreasonably for older people. Many providers do offer special plans with tax relief for the over-60s.

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