The numbers of people waiting for NHS treatment hits new record after new record every month.
UK employers have been left carrying the can when it comes to the knock on impact on UK plc productivity and it is clear many have taken the initiative to offer group private medical insurance (PMI) for their employees to manage the issue.
Providers are experiencing record demand for their propositions as companies continue to fight a war for talent and advisers remain key to communicating these benefits on offer.
But while there appears to be general consensus that support for employers is needed in the form of tax breaks for group PMI offerings, there is precious little confidence that such tax breaks will be forthcoming as a general election looms into view.
Health of the nation deteriorating
“The health of the nation is deteriorating at an alarming rate due to poor access to NHS treatment meaning that many employees are failing to receive the support they need in the time-frame they need it,” Brett Hill, head of health and protection at independent consultancy Broadstone, tells Health & Protection.
Hill maintains these trends are translating into record levels of economic inactivity because of chronic illnesses witnessed since the pandemic.
“This was driven partly by increases in mental health and MSK conditions but also by a 41% increase in general poor health (“Other health problems or disabilities” according to ONS data),” Hill says.
“Ultimately, this is harming employers who must replace staff leaving the workforce and train up new recruits, all of which drags on money, time and productivity.
“We have also seen a sharp increase in sickness absence rates across both the private and public sectors in the past few years, with sickness absence rates in the private sector now at their highest since 2006.”
But these trends are also translating into increased demand for group PMI.
Fergus Craig, commercial director at Axa Health, told Health & Protection in general, demand for PMI and health and wellbeing support services has been strong this year with growth ahead of the insurer’s expectations.
“We believe this is a result of the pandemic bringing about a greater awareness of health issues combined with stretched NHS services,” Craig continued.
“There has been increased interest from businesses who provide private healthcare to their employees as a benefit in areas such as mental wellbeing (up around 160% compared to pre pandemic).
“It’s clear that private healthcare is becoming an ever more valued benefit available to employees.”
Ally Antell, distribution director at Aviva UK Health, said the insurer is seeing record levels of business growth – particularly in the corporate sector.
“A key contributor to this growth is being driven by expansion within existing schemes, as employers are extending cover to more of their workforce,” Antell added. “We’re also seeing strong performance in the SME sector.
“It’s not just employers who recognise the benefit of private healthcare – an increased number of employees are adding their dependents to their cover through flexible benefit schemes, demonstrating the value that they’re now placing on private healthcare.
“The flexible working environment has increased competition for talent and employee attitude has changed since the pandemic. Employees are increasingly looking for an employer that demonstrates that they care about them as an individual and puts their health and wellbeing first.”
But the increased demand in claims is not without its challenges for providers, Antell says.
“We have worked hard to improve service over the summer and will continue to carefully monitor our performance to ensure that we’re delivering high quality service to our customers,” Antell adds.
War for talent
Hannah Nelson, group marketing and development coordinator at Sante, points out increased demand for wellbeing and benefits has been at smaller as well as larger firms.
“There is increased appetite from the smaller businesses, requests at renewal to cover those previously uninsured at large SMEs and corporates.
“We have seen a shift of main group contacts from finance directors to HR teams – so it’s no longer a cost only decision, it’s an increased focus on employee wellbeing and benefits.”
Though Steve Ellis, associate director at Prosperis, says another factor is a shortage of skilled employees who are demanding comprehensive benefits when seeking new roles.
But while the demand is clearly there, providers are mindful of the ongoing cost of living crisis and its impact on clients.
“More and more providers are offering not only competitive pricing, Mike Hesch, head of employee benefits at Hooray Health & Protection, says.
“But also including a cost-effective element of optical and dental, where in some cases we are seeing providers offering this option free to new clients,” he adds.
“With an increased demand on an already thinly stretched NHS, we can only predict some form of tax break to help encourage more companies to implement group PMI or widen their offering to more staff.”
Value, value and more value
And amid these current conditions advisers play a critical role in ensuring clients see the true value of group PMI offerings, Marcia Reid, non executive director at Sherwood Healthcare, explains.
“It’s all about value, value, and more value. Intermediaries are best placed to align healthcare policies with their clients’ reward and wellbeing strategies,” Reid maintains.
“Independent advice is crucial on helping employers wade through the plethora of options available.
“Intermediaries can win, and retain, clients by listening carefully to the employers’ business goals, understanding the ethos of the organisation and matching the health and wellbeing offering to their budget and aspirations.
“Benefits are only as good as the way they are accessed and intermediaries can play a key role in promoting healthcare services to employees and helping them appreciate the support that is available to them.
“Helping to keep the healthy employees well (and reduce claims costs) is as important as supporting those needing diagnostics and treatment.”
This still remains true despite some “painful” premium increases as claims incidence and costs continue to rocket, Reid says.
“I believe this is going to be a major challenge for insurers to keep their services within affordable ranges,” Reid continues.
“The NHS continues to creak under the pressure of unmanageable waiting lists, post pandemic backlogs and a dissatisfied workforce.
“However the private sector is not immune from the challenges of availability of, for example, anaesthetists and operating theatre technicians and waiting lists are growing even within this sector. Keeping members healthy has to be a priority and the insurers’ product development with additional wellbeing initiatives reflects this need.”
Tax breaks unlikely
Looking ahead, despite record wait times, backlogs and a dissatisfied workforce, advisers are not holding their breath that government will greenlight tax breaks for employers offering health support to staff- even though it has consulted on this this year.
Claire Ginnelly, health expert and vice-chairwoman of the Association of Medical Insurers and Intermediaries (AMII), said: “With no sign the NHS will be improving any time soon, there is no reason to think the desire for PMI is going to reduce.
“However, this needs to be balanced with the financial pressures companies and consumers are facing. It is difficult to see in a new government will make a difference.
“There is no sense from Labour that it will be supporting employers more with tax breaks if they get into power after the next election.
“However, if inflation starts to fall and the financial pressures ease, employers may be better placed to take out cover.”
Matthew Reed, Equipsme founder and managing director, who has visited Downing Street several times to campaign for such tax breaks says they would encourage further take up of corporate health benefits, making it easier for progressive employers to support their staff and reduce the burden on the NHS.
And Hill warns employees, particularly lower paid ones, ‘opt out’ of employer-funded PMI cover because the P11d liability reduces their net take-home pay.
“This is especially relevant given the pressures on household budgets at present, when employees are struggling to cope with sharp rises in essential costs like housing, food and utilities”, he continues.
“Many employers are looking to extend coverage throughout the workforce, but this will be of little help if lower paid employees are disincentivised from accepting the offer of company-funded PMI because it ultimately reduces their take home pay at a time when they cannot afford to earn less money.
“While employers no doubt have a role to play in encouraging take-up, by explaining the value of company-funded private healthcare, it will fall on deaf ears where households are already struggling to make ends meet.”