Top government officials are discussing a policy proposal known as "top-ups" for the National Health Service in England and Wales, which would allow insurers to offer NHS patients coverage for treatment, particularly expensive drugs, not covered by the service.

Sometimes paid by employers as an employee benefit, private medical insurance supplements NHS services in the United Kingdom. However, current practice requires that once patients seek care outside the NHS, they must continue to receive all care for that condition outside NHS facilities. If authorized, the NHS top-up plan would aim to pay for uncovered treatments while patients still receive the remainder of care from the NHS.

"It's a whole new market that hasn't been explored yet," said Philip Blackburn, senior economist at health care consultant Laing & Buisson Ltd. in London. "It will change the landscape.

"It remains to be seen how much extra money the consumer has for health care,” he added. “The market is unlikely to explode overnight. It will be digested gradually."

Alan Johnson, the government minister in charge of health care, has asked Mike Richards, the Department of Health's national clinical director for cancer, to review the proposal and report back in October.

According to a July report from Laing & Buisson, 4.2 million people in the United Kingdom purchased health insurance policies or enrolled in self-insured employer plans at the beginning of 2008, a rise of 1.3 percent over 2007. Those plans covered nearly 7.5 million people, or 12.3 percent of the population. Individual policies shrank by 0.5 percent while corporate demand rose 2.3 percent, according to the report.

Cancer treatment is at the nexus of the debate over top-ups. Some drugs licensed for marketing within the United Kingdom are barred from NHS use on cost-effectiveness grounds established by the National Institute for Health and Clinical Excellence. The agency evaluates clinical trial data on drugs and other medical technologies and assesses their cost-effectiveness as measured in British pounds per quality-adjusted life year, or a year of good health.

Drugs that cost less than 20,000 pounds, or $37,168, per quality-adjusted life year are usually judged as cost-effective. Those that cost 30,000 pounds, or $55,752, or more are unlikely to be approved. Those that fall between require additional evidence and scrutiny, according to a spokesman for the National Institute for Health and Clinical Excellence.

Most recently, the agency drafted a decision that proposed barring NHS patients with advanced or metastatic kidney cancer from having access to Sutent and three other cancer-treatment drugs. Sutent costs more than 3,000 pounds for a six-week cycle; while it increased the length of time some patients survived without any disease progression, it did not meet the cost-effectiveness threshold.

Ignoring current practice, one company has already jumped into the top-up market. Armed with a legal opinion in favor of top-ups that was written by a government attorney, Taunton, England-based Western Provident Association, a nonprofit insurer, in April 2007 began offering a plan covering up to 50,000 pounds of cancer medications. The annual premium is the policyholder's age plus a 5 percent tax.

Six weeks ago, the association began offering a more comprehensive plan that covers an array of preventive and routine care costs, including a 200-pound payment each time a policyholder has a child. An option allows adding cancer drugs to the policy.

"All we're trying to do is complement the gaps in the NHS," a company spokesman said. "Whatever [the government] decides in October, it's an opportunity for us. We're ahead of the curve. We will evolve the policy if we need to."

The spokesman would not disclose how many people purchased such policies.

For employers, the potential change in government policy gives them a chance to re-evaluate the health benefits they provide, restructure how they are provided and how they are financed—whether through employer contributions or salary deductions, especially if top-up coverage costs less than traditional medical insurance.

"If you're effectively self-funding the medical plan, it allows you to say, `Let's let people get coverage from the NHS for the things that NHS does well, and we'll supply some sort of supplementary coverage for the things people have to wait for,’ ” said Paul Ashcroft, a principal at Mercer who heads the company's London-based health and benefits office. "It may open up those sorts of discussions."

Structuring a new plan with wider access to benefits also means employee-benefit managers need to understand more about the health marketplace and how it affects their programs.

"Be aware of what's out there in the clinical world, what drugs are coming on the market and how they work," said Elliott Hurst, senior consultant for health care and risk consulting with Watson Wyatt Worldwide in London. "From the financial perspective, you've got to a keep a close eye on your claims expenses and trends in the demographics of your group.... Try to paint a picture of what the implications are if you take a particular stance on a particular drug."

Benefit managers also need to be aware of how their program structure affects health services.

"The liability to you needs to be clear," said Fiona Harris, Staines, England-based head of personal markets with the British United Provident Association. "You don't want somebody halfway through the [treatment] process and have a conflict."

Finally, managers of employee benefit plans need to think about how they communicate changes in plans, particularly if they choose to jettison or reduce cancer coverage should the NHS supplement become available.

"It's potentially quite a difficult message," Mercer's Ashcroft said.

Filed by Jonathan Gardner of Business Insurance-Europe, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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