The NHS should be financed by insurance, not taxation, according to a report by a cross-party group published by think-tank Civitas.

The Health Policy Consensus Group, chaired by David Green, concludes that "current policies are self-contradictory".

"The government increasingly advocates consumer choice and yet the NHS remains a highly centralised public sector monopoly," said Green.

Forum Response: General Insurance Standards Council

A spokeswoman for the GISC told ePolitix.com: "Currently the sale and advising on private medical insurance is regulated by the General Insurance Standards Council. At the moment this is voluntary, but in October 2004 this will become compulsory under the statutory Financial Services Authority.

"In the FSA's recent Consultation paper, CP160, they have identified private medical as presenting 'a higher risk of consumer detriment than other insurance products covered in this paper'.

"Clearly it is important that regulation ensures that customers, both private, and corporate who are arranging schemes on behalf of their employees, are properly advised about the product and that claims are well administered and not unfairly dismissed.

"If private medical insurance becomes an even greater financial dimension to the funding of the NHS, in addition to national insurance contributions paid by those in employment, it will be even more important that regulation protects customers.

"Of course regulation itself has to be paid for, and the cost is ultimately borne by policyholders. Most private medical insurance is bought by people in employment, because it is expensive and becomes increasingly so with age. It is hard to see how pensioners and those on benefits could be expected to fund their own personal medical insurance.

"And the question arises as to how insurers could be encouraged to offer cover to everyone, and how those who were unable to afford it would be treated."