Is the use of privately funded health care on the rise?

Introduction

With the NHS under huge pressure and public satisfaction at an all-time low, there are concerns that near-record waiting lists are driving more patients to pay for private treatment or take out private health insurance. 

But looking at the evidence, to what extent are people turning to privately funded health services? And what are the implications? Is the UK sleepwalking into a two-tiered health care system, as some commentators have suggested? 

To help answer these questions, we explore trends in attitudes, activity and spending on privately funded health care. Where possible, we draw on data covering the whole of the UK, but some data sources exclude Northern Ireland or cover England only. While there may be some distinctive regional trends at play, we believe the findings generally hold true for the UK overall. 

Figure 1 provides a framework for thinking about private health care in England and the UK, distinguishing between the type of organisation that provides care and the source of funding (the state or the individual), and how it relates to NHS care.

Have public attitudes and behaviours towards private health care changed?

Concerns that large numbers of patients are ‘going private’ – by choice or necessity – due to pressures on the NHS have gained prominence since the COVID-19 pandemic. In this section, we explore whether public attitudes towards private health care have genuinely changed as NHS waiting lists have grown.

Our public perceptions polling (in partnership with Ipsos) includes a question about whether people are likely to pay for private insurance or private health care. Since November 2021, there has been no statistically significant change in the proportion of UK adults saying they would be likely to pay for private health care or insurance if they needed it (Figure 2). This proportion hovers consistently at just under 1 in 4 people.

Similarly, the proportion who already pay (or have employers who pay) for private health care or have insurance has remained relatively stable, at around 1 in 7 people. Among those who already pay or would be likely to do so if needed, the most common reason for using private health care is being able to access care more quickly.

Other sources of evidence suggest that difficulties accessing NHS services might be contributing to some people turning to privately funded health care. A 2022 IPPR/YouGov survey showed that 12% of people in Great Britain turned to privately funded services, having found it difficult to access NHS health services during the pandemic – and only 1 in 6 (17%) said they would hypothetically do so in the future. A more recent ONS survey, also of people living in Great Britain, found that some people waiting for NHS treatment are going private, funded either by insurance (3%) or out-of-pocket (4%), because the NHS waits are too long. However, the lack of consistent polling data from before the pandemic, when NHS waiting times were shorter but steadily growing, makes it hard to analyse trends.

Data on the private health care market in the UK – available over a longer period than most surveys – provide another way to understand public attitudes and behaviours. LaingBuisson, a market intelligence firm specialising in private health services, estimates that about 1 in 10 people (11%) in the UK were covered by private medical insurance in 2022. This is the highest level measured since 2020, but still below the peak of around 12% in 2008, shortly before the global financial crisis. This suggests economic factors may influence the uptake of private health insurance as much as NHS waiting lists do.

Taken together, these sources do not suggest a major shift in the likelihood of the public paying for privately funded health care if they needed it. Rather, they suggest a roughly stable picture of a minority of the population being open to privately funding their health care.

Has there been an increase in the volume of privately funded health care activity?

Analysing activity levels in privately funded care can help identify possible trends in utilisation. Here, we focus on elective inpatient treatment, which often features in debates around private health care and is virtually the only area with comparable data on NHS and privately funded care. The Private Healthcare Information Network (PHIN) publishes a range of data on private health care use in the UK, including on elective inpatient activity. We have compared this to the equivalent activity data from the NHS focusing on England.

Privately funded elective inpatient care – whether paid for by insurance or out-of-pocket – was a small part of all activity in England between 2019/20 and 2022/23. In 2022/23, around 8.3% of all acute elective inpatient activity in England was privately funded (up from 7.4% in 2019/20, see Figure 3).

This is a relatively sizeable increase in activity of about 10.2% between 2019/20 and 2022/23, compared with a decrease of 3.2% in NHS funded activity in the same period. However, privately funded elective inpatient care is still a small proportion of total elective activity. It is also worth noting that this change took place while the NHS was slowly recovering from COVID-19-related disruptions – completed pathways throughout 2022/23 were lower than pre-pandemic levels and only recovered consistently partway through 2023/24.

While the overall share of elective inpatient activity that is privately funded has not changed significantly, there have been some more notable changes in relation to specific procedures where the private sector is playing a larger role – with hip replacements, for example. Independent sector provision (funded both privately and by the NHS) has helped drive an overall increase in hip replacement activity over the past decade.

The number of elective hip replacements paid for privately almost doubled from around 17,000 in 2019 to nearly 30,000 in 2022. This will have had substantial financial implications for many of the patients who opted to fund their care privately. Yet despite this upward trend, the large majority of elective hip replacements are still funded by the NHS – 74% in 2022 compared with 85% in 2019.

The private health care workforce

The lack of major growth in private sector health care activity can be partly explained by workforce availability. The independent sector relies on qualified clinicians to deliver services, and there is a limited pool of such people (particularly qualified medics) to provide care across the NHS and independent sector.

PHIN reports the number of consultants actively working in private health care. Since 2019, this number has fluctuated a bit but remained relatively stable at around 8,500 to 9,000 consultants. This means that about 13% of all consultants in the UK deliver at least some privately funded health care in a given year, and estimates suggest nearly all of these consultants (around 90%) also spend some of their time working in NHS services. 

Have there been any changes in spending on private health care?

The final angle we consider is spending. Here, we look at the latest ONS data on health care spending to understand if there has been any shift towards privately funded care. 

Total UK health care spending in 2023 was £292.4bn, the majority of which was government spending at £239.4bn (81.9%), including most of the funding for NHS services.

Private health care is funded both from personal out-of-pocket spending and voluntary health insurance (VHI) schemes, which in 2023 accounted for £40.4bn (13.8% of total spending) and £7.3bn (2.5%), respectively. While spending in both categories has increased over time, neither has increased at a faster rate than government spending in the past decade. In fact, a higher share of total UK health care spending came from government spending in 2023 (81.9%) than it did in 2013 (79.0%).

Out-of-pocket payments are spent on a wide range of health-related goods and services, including over-the-counter medicines, user charges for NHS services and treatment not provided by the NHS, as well as the private provision of treatment that is a direct substitute for the NHS. In 2022, the biggest share of out-of-pocket payments was spent on long-term care (£14.1bn, 38.3%) – which includes a substantial element of what is generally considered social care – followed by medical goods (£12.2bn, 33.2%). More money was spent on dentistry (private dentistry and NHS charges) (£3.4bn, 9.1%) than on inpatient (£927m, 2.5%) and general outpatient (£1.2bn, 3.3%) care combined (Figure 4).

In the UK, VHI spans a range of different insurance policies that provide different levels and types of coverage, which tend not to offer a comprehensive alternative to the cover provided by the NHS. Nearly two-thirds (60.2%) of spending on VHI goes towards medical and dental care. A significant percentage (31.8%) is not spent on activities directly associated with health care but rather on system governance and finance administration (that is, marketing, risk assessment, claims handling and so on). Of VHI spending on clinical care, outpatient care accounts for the highest share (42%), followed by inpatient and day cases (32% and 25%, respectively). 

An upward trend in VHI spending was dented around the time of the global financial crisis in 2008/09, and even though the population has grown, fewer people have VHI today than they did in 2008. In the UK, it is relatively expensive, especially for individual policyholders, with premiums based on individual risk rather than community rating (where insurers price policies based on characteristics of large groups of people). This would suggest that a range of other factors, including the state of the economy, play an important role in influencing the market for private health insurance – perhaps more so than NHS waiting lists.

Similarly, household spending on health services has been broadly stable. Average household spending on health care – combined outgoings on out-of-pocket services and health insurance policies – has fluctuated between £6 and £9 per week since the early 2000s, with a slight increase between 2019/20 and 2021/22. Spending on health insurance in the average UK household has remained stable at around £2.50 per week since 2019 – though this does not necessarily reflect the use of insurance-funded private health care.

Conclusion 

The NHS’s struggle to address care backlogs, which were greatly exacerbated by the pandemic, has sparked prominent public debate about privately funded health care. There are concerns that the UK is moving rapidly towards a more hybrid model of health care in which the private sector, and privately funded care, plays a much larger role. Yet, we have shown in this piece that, so far, there is little evidence to suggest such a significant shift is happening. 

Public attitudes towards privately funded health care remain relatively consistent. VHI coverage has increased slightly in the past few years but remains below its historic peak. Spending on private health care has not grown at a faster rate than overall spending on health care. Nor has the overall share of elective inpatient activity being funded privately (in England) changed substantially. 

However, there have been relatively large increases in the volume of certain procedures, for example hip replacements, being privately funded. This will have major financial implications for those patients, who may have felt the wait for NHS treatment meant going private was their only realistic option. This also raises important questions about equity. Not everyone can afford to pay for care, and those who can may not be those who are most in need of care. The continuation of the trends we have seen in relation to hip replacements could therefore widen inequalities in access to care. There are also questions – given the limited pool of staff – about the impact of a shift to the private sector on NHS resources. 

The lack of a major surge in privately funded health care is partly to be expected. There are real structural constraints on its growth in the UK, including affordability (particularly during the recent period of cost-of-living pressures), the lack of insurance coverage for pre-existing health conditions and limits on capacity in the independent sector (much of which is being used to deliver NHS-funded activity, as prioritised by successive governments, which the new Labour government has said it plans to continue and potentially expand).

So, while long waiting times may be driving some people to go private for aspects of their health care needs (a trend that raises some important questions for national policy), the primary source of health care for most people is still the NHS. Furthermore, the majority of the UK population continues to support the NHS: a model of tax-funded, comprehensive health care free at the point of need.