NHS payouts for medical claims hit £65bn

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Oct 09, 2017
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The service paid out £1.4 billion for claims last year

Toby Melville/Reuters

The NHS has now paid out £65 billion for medical claims, draining the service of vital funds and driving GPs out of practice, a report has found.

It says that Britain is rivalling the US in terms of compensation paid out, with UK’s medico-legal bill now £24 a person — more than twice the £9 a person in the US, despite the country’s reputation as being more litigious.

Annual payouts in the UK for the year ending March 2016 were £1.4 billion, a figure that the report claims is increasing by 10 per cent every year.

The report also warns that the cost of claims in the UK is likely to increase substantially after the drop in the discount rate from 2.5 per cent to -0.75 per cent, announced in February. Many in the insurance industry believe that the reduction will lead to overcompensation.

In the report, published by the Centre for Policy Studies, Paul Goldsmith, a consultant neurologist and policy strategist, claims that outdated legislation is partly behind the soaring costs. The Law Reform (Personal Injuries) Act 1948 does not reflect current realities, he said.

That means financial awards reflect the assumption that the money will only be used for private healthcare. Claimants who use NHS care, at no cost to them, are allowed to retain the awards.

Financial awards take into account lost future salaries, meaning that two individuals with identical claims could receive dramatically different payouts, Goldsmith adds.

High earners who fear that NHS compensation for personal injury would be insufficient in cases of medical negligence should take out private insurance for top-up compensation, the report says.

It also calls for private insurance top-ups for those wanting to guarantee private care or higher loss of earnings cover after car accidents. They would be forced to take out insurance policies with higher car insurance premiums.

“If they are a very high earner, then their premium would be correspondingly high,” the report says.

It also recommends that for all personal injury awards, loss of earnings should be fixed at the national living wage, or a multiple thereof, or a multiple of salary. It points to a model in Australia where the cap is three times salary.

Another factor is that a patient’s condition is not reappraised, so that if a patient improves or dies, future costs are not incurred but the patient or their families keep the payout.

“The current system is expensive, unsustainable and can cause more harm than good,” Goldsmith said. “It is one of the government’s greatest liabilities. The cost of claims is increasing rapidly … and is set to increase even faster.”

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