The Flawed Immigration Health Surcharge

Thursday, September 8, 2016
Dr. J. Meirion Thomas


Read the original article at ConservativeHome

A rotten deal for the NHS, patients and taxpayers

Despite the excitement of the Olympics and the boredom of the Labour leadership election, financial troubles in the NHS still makes almost daily headline news. To close the £22 billion funding gap by 2020, there must be unprecedented rationing of hospital services. Cataract surgery will have to be postponed, an outcome criticised by the Royal National Institute for the Blind. Steve Cannon, one of the most respected orthopaedic surgeons of his generation, has warned that delays in joint replacement will result in crippling arthritic pain and crumbling joints.

What have I done personally to prevent this tragic outcome for the NHS apart from devoting thirty years of my life to specialist cancer surgery? For more than three years, I’ve been banging my head against the impenetrable, soundproofed wall of the Department of Health, trying to persuade those complacently cocooned within, that billions of pounds could be saved by restricting access to the NHS only to those who are entitled to the privilege. I coined the phrase that “taxpayers should fund a National Health Service and not an International Health Service”.

Imagine my surprise therefore, when it was announced in the 2016 Queen’s Speech that there was to be an NHS Overseas Charging Bill and that “overseas migrants and visitors will be charged for services to which they are not entitled.” A battle won but not the war because those who are not entitled to free NHS care should not be taking up precious facilities, for payment or not. They should be in the private sector where there is plenty of capacity.

The Government, embarrassed by its failure to control health tourism from outside the EU, had already announced its plan to raise £500 million from better charging of overseas visitors of which £200 million would come from the Immigration Health Surcharge (IHS). This policy was a combined initiative by the Home Office and Department of Health, and was included in the 2014 Immigration Act.     

I would argue that the IHS was possibly one the most ill conceived pieces of legislation enacted by the Coalition Government. It may be costing the British taxpayer a fortune, and after being in place for more than one year, needs to be urgently reviewed.

Every non-European student or migrant applying for a UK visa for over six months, on or after the 6th April 2015, must pay the IHS at the time of application. The charge is per family member and per year and is set at £150 for students and £200 for migrants. The surcharge does not apply to visitors or those with “indefinite leave to remain”. Once payment is made, the student or migrant and their family members are lawfully entitled to full and free access to every NHS service without restriction.

In preparation for this policy, the Department of Health in 2013 commissioned PREDERI, a Management Consultancy, to estimate the baseline annual cost of treating non-EU citizens in the NHS based on 2012-2013 figures. In their report, “Quantitative Assessment of Visitor and Migrant Use of the NHS in England”, PREDERI estimated this cost in 2013 as £736 per person which included the cost of treating health tourists, defined as those who come to UK with a pre-existing illness and with the intention of accessing free NHS care.  It is therefore puzzling why the final IHS charge was fixed at a derisory £150/£200, when this would clearly amount to a huge subsidy of the true costs incurred.  

Once the IHS is paid, a “green banner” appears on visa holders NHS records and they are entitled to every NHS service without exception. Of concern, pre-existing medical conditions are not excluded as would happen with commercial travel insurances or with the Schengen visa.  

The most recent figures available to me show that between 6th April 2015 and 14th March 2016, (three weeks short of the first full year), the cash amount raised from the IHS was £175.6million and during that time, a staggering 423,278 student/migrant visas were issued. However, the net benefit/deficit to the Exchequer is this gross amount (£175.6million) minus the costs to the NHS of treating “green- bannered” patients. Based on the PREDERI figures described above, one can confidently predict that the account would be in serious deficit.

Furthermore, it is likely that about half a million more IHS visas will be issued every year adding to capacity problems within the NHS. Some students/migrants will of course return home when their visas expire but not all, by which time they will probably have acquired an NHS number, which is a sure passport to free health care.

I invite the Cost Recovery Unit at Department of Health to prove me wrong, but this will be difficult if not impossible because unfortunately, Trusts don’t keep records of the costs incurred by individual green-bannered patients.  Why was a new and potentially expensive policy introduced without a parallel cost/benefit analysis in place?

I have asked for these matters to be investigated by the Health Select Committee, and despite a positive reply from the Chair, the IHS has not yet been selected for discussion despite the fact that it’s introduction may have been a disastrous error.

The Government have almost achieved their goal of raising £200 million from the IHS. Where will the other £300million come from? Supposedly from better charging of those who arrive in UK on a visitor’s visa. But we know from the report by Creative Research, commissioned by Department of Health in 2013, that of invoices raised on chargeable visitors, only 16% were paid, meaning that 84% were unpaid and contributed to Trust debt. The majority of these patients simply absconded or refused to pay.

In an attempt to incentivise NHS Trusts to charge more efficiently, and again implemented from April 6th 2015, Trusts were allowed to invoice chargeable patients 150% of the cost of treatment. At the present time, there has been no announcement of the revenue raised during the first year of this policy and whether it approximates to the £300million gap, an unlikely scenario.  In any event, the costs quoted by The Department of Health, and in this article are based on the NHS tariff, which is the bare-bone remuneration paid by Clinical Commissioning Groups to hospitals. The equivalent cost of treatment in the private sector is about three or four times greater.       

So what effective steps will Theresa May’s new Government take to curb health tourism? Hopefully the financial crisis in the NHS will trigger effective action. As a matter of urgency, I urge Mrs May to revisit the IHS, which was introduced by the Home Office on her watch. And will the new administration forge ahead with the NHS Overseas Charging Bill, or was the announcement just another Department of Health smokescreen, to compensate for policy failure?

Dr. J Meirion Thomas was a Professor of Surgery and a Consultant Surgeon in the NHS