Report of the Royal Commission on National Health Insurance

Bibliographic data

Monograph

Identifikator:: 1740277147

URN:: urn:nbn:de:zbw-retromon-132094

Document type:: Monograph

Title:: Report of the Royal Commission on National Health Insurance

Place of publication:: London

Publisher:: Stationery Office

Year of publication:: 1926

Scope:: XII, 394 S.

Digitisation:: 2020

Collection:: Economics Books

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3934 APPENDIX A. to this condition. As we shall show, there are in the present basis certain margins over the general average of expenditure to be expected, and we shall advise the release of these margins. It should be understocd that we do not include the accrued surpluses of the Approved Societies in the margins to which we refer; we have felt constrained by our instruc- tions from proposing any changes of basis which would involve drafts upon these surpluses. Subject to this reservation the provision which we shall propose to make will be that which, so far as we can estimate, would be required if the whole system were operated through a common fund. Tar RATE OF INTEREST. 6. The rate assumed in the present financial basis is 3 per cent. per annum. The actual receipts from interest fall into three categories (i) interest on reserve values, (ii) interest on the credits of the Approved Societies in the Investment Account* maintained by the. Department (with which may be included interest on the balances of the societies’ current accounts in the National Health Insurance Fund), and (iii) interest on the investments made by the societies, or (where this alterna- tive procedure has been selected by societies) on the investments made by the Department on their behalf. The rate realised is an average dependent on the receipts from these three sources, which, it may be added, are exempt from taxation. As regards (i), interest is credited on reserve values at the fixed and uniform rate of 3 per cent. per annum and, the reserve values being book credits, is derived from the product of the portion of the contribu- tions retained for the service of reserve values as shown in paragraph 1 above. Receipts under (ii) are also based on a uniform rate; this rate, being prescribed by regulations, may be varied from time to time. It is at present 43 per cent. per annum, and assuming that after 3lst December, 1926, the balances of the interest income of the Investment Account are applied solely to the provision of interest on the credits of Approved Societies, etc., making up the total of this Account, it will evidently be possible to maintain the rate at this figure for a prolonged period. Receipts of category (iii) are derived from interest on trustee securities selected by the individual Approved Societies. The rates vary to some small extent with the types of investment selected by the societies, but the average appears to be about 5 per cent 7. The average rate of interest to be realised in future, taken ‘over the whole of the funds and credits of the Approved Societies, will depend very largely upon the relation between the amounts of funds (or credits) respectively attributable to those three categories. Reserve values represent at present about 45 per cent. of the societies’ assets and, since the interest provided on reserve values is at the rate of 8 per cent. only, the average rate of interest now realised is under 4 per cent. notwith- standing the high rates at which the actual money investments have been made. In this respect, however, present conditions are about to be greatly altered. The limitation of the sickness and disablement benefits to the age of 65, for which the Contributory Pensions Act provides, will have the effect of reducing the reserve values by about £37,000,000+ and, so far as present benefits are concerned, a further reduction in this asset is to be expected as a consequence of the change of basis which we shall find it possible to recommend for the purposes indicated in our terms of reference Under these new conditions the proportion which * For convenience the singular number is used: there are in fact three Investment Accounts maintained respectively by the Ministry of Health, the Scottish Board of Health and the Welsh Board of Health, but the procedure is identical throughout. Similarly there are three National Health Insurance Funds. + Report of the Government Actuary (Cmd. 2406), para. 29.

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