Insurance Model No Substitute for NHS, Says Underwriter 2026

In the debate over healthcare reform, the insurance model is often proposed as a substitute for the NHS, but as a retired insurance underwriter, I must disagree profoundly. The idea that a social insurance model could deliver better outcomes for patients ignores the fundamental business principles that govern insurance. Let's examine why the insurance model is no substitute for the NHS.

Understanding Insurance: Two Flavours

Insurance comes in two distinct flavours. First, events that become likelier as time goes on—such as life assurance. The older you get, the more likely you are to die, and the more premium is needed to cover the risk. Second, events whose likelihood stays essentially the same over time—such as home insurance. The likelihood of a house burning down is much the same for everyone, and the cost is spread evenly between policyholders.

Medical insurance clearly falls into the first category. Premiums need to rise with age. To reduce premiums and keep customers, insurance companies apply ever-increasing excesses and co-pays, and can refuse to cover pre-existing conditions. The more you need medical insurance, the more expensive and difficult it is to get.

The Business Case Against Medical Insurance

When you buy an insurance policy, premiums are calculated to include the cost of claims (about 60%), administrative expenses, and profit margin. For medical insurance, the claims cost is highly skewed: a small proportion of policyholders account for the majority of claims. This leads to adverse selection and moral hazard, driving up costs for everyone.

Moreover, insurance companies are profit-driven. They have a fiduciary duty to shareholders, not patients. This inherent conflict of interest can lead to denied claims, limited coverage, and a focus on healthy customers rather than those in need.

Comparison: NHS vs. Social Insurance Model

Key Takeaways

• Medical insurance premiums rise with age, making it unaffordable for those who need it most.
• Insurance companies can refuse coverage for pre-existing conditions, leaving patients without care.
• The profit motive in insurance conflicts with patient welfare.
• The NHS provides equitable care regardless of age or health status.
• A social insurance model would exacerbate inequalities and fail to deliver better outcomes.

Why the NHS Model Works

The NHS pools risk across the entire population, spreading the cost evenly. This eliminates the problem of adverse selection and ensures that everyone receives care based on need, not ability to pay. While the NHS has its challenges, its core principle of free at the point of use is worth preserving.

In contrast, a social insurance model would introduce barriers to care, increase administrative costs, and prioritise profit over patients. As an underwriter, I know that insurance works best for predictable, evenly distributed risks—not for healthcare, where costs are concentrated and unpredictable.

FAQ

In conclusion, the insurance model is no substitute for the NHS. The business fundamentals of insurance make it inherently unsuitable for healthcare. We must preserve the NHS and reject proposals that would replace it with a profit-driven system that fails patients.