UK employers spent £800m more on private medical insurance over the past year.
This is according to Matthew Gregson, executive director at Howden Employee Benefits, who was chairing a webinar organised by the brokerage this morning.
Gregson cited three primary drivers for this increase in costs. These included growing membership as employers see the value of PMI, associated issues created by stubbornly high NHS wait lists, and new drug and treatment approvals driving up the unit cost of treatment.
Higher than ever
“Demand for private medical insurance is higher than ever,” Gregson told the online audience.
“And as a result we are seeing that more and more members are trading off the tax burden that they have to pay to be a member of your medical scheme for the safety blanket of having cover,” he continued.
“We’re seeing that coverage is going up by potentially 15% year-on-year as more of your eligible employees join plans.”
NHS on its knees
But another reason for the increase, Gregson added, is that more and more people are having to rely on private medical insurance to access the healthcare they need.
“We all love the NHS in this country,” he continued. “It’s an incredible institution that we’re very proud of, but there’s no doubt that from a funding perspective and a demand perspective, it’s been on its knees for many years now,” Gregson maintained.
“What we have seen since Covid is more and more employees being reliant on private healthcare and that claims pathway. In other words, I’m feeling I can’t get access to the healthcare that I need on the NHS and so I’m reverting to private cover.”
Issues with backlogs
But the system is also contending with issues created during the pandemic, Gregson said.
“Also as a result of Covid, what we saw was an increase in backlog and wait times,” he continued. “Now those wait times are starting to reduce a little bit.
“Sadly, they’re not near government targets yet, but we are still playing catch up in the healthcare system in the UK and where the NHS can’t cope with that fully, again people are looking to private medical insurance – both inside and outside the workplace to meet that demand.”
Rise in claimants
In addition, the number of claimants are on the rise, Gregson added.
“We’ve seen the number of people claiming on medical increase by up to 30% over the past few years,” Gregson continued.
“What we call the incidents rate in the medical insurance industry, so the number of members who typically claim year on year, that used to hover around the 22% mark, that’s now spiking to 30% or more, which also equates to about a 30% increase in the number of people who are actually claiming.”
Stark results
Taken with new drug and treatment approvals driving up the unit cost of treatment, the impact has produced some “stark” results, Gregson said.
“When we add those three things together, it’s produced some very stark results, particularly for small and medium sized employers who are much more beholden to the general cost of healthcare than necessarily the performance of your own scheme and the claims of your own people,” Gregson continued.
“And that stark impact has seen £800m more in medical insurance spend for employers over just the year alone.
“When you look at the last four or five years post Covid, that’s risen by multiple billions having to be put into the system to provide more healthcare to more people at a higher unit cost.”
