The contents of this article were originally delivered at the inaugural ‘Benefits for Breakfast’ roundtable on 22 November 2023, hosted by Lockton People Solutions, and included discussions led by the Lockton actuarial team and senior Lockton consultants. Attendees also heard from special guest Dr Richard Caddis, Director of Health & Wellbeing and Chief Medical Officer at BT Group, on the impact on employees of a fast-changing healthcare landscape. Full details of that event are available here (opens a new window).
Several factors have reshaped the landscape for private medical insurance (PMI) in recent years, from the COVID-19 pandemic to the emergence of virtual GP services. Amid these changes, it’s imperative that employers take steps to interrogate claimant data and better-understand their claims risk.
Examining data from Lockton’s portfolio, we’ve drawn out four core claimant trends for companies to consider:
1. The higher claims environment post-COVID
COVID-19 has had a substantial impact on the utilisation of PMI, creating a perfect storm of high frequency and high severity claims which shows no signs of abating in the near future. Analysis of the Lockton portfolio reveals a 25% increase in average claims value per member post-COVID-19, when compared against pre-COVID-19. Utilisation rates, which measure the proportion of claimants within the insured population, also saw an increase of 6% for this same time period. These factors are contributing to a step-change in medical inflation.
As such, plan sponsors should review their management information reporting to better understand trends. Insights can be used to drive proactive and preventive measures for plan members.
2. NHS waiting lists are driving demand for PMI
NHS waiting times have surged since 2020, encouraging more people to utilise their PMI. COVID-19 has been the key driver of the deterioration in NHS performance, with the associated spike in hospital admissions causing delays to care. This in turn has led to the need for more invasive and time-consuming treatment, while also exacerbating existing issues, such as staff shortages. Long lead times for staff to begin training, strike action, and changes to post-Brexit immigration policy have also contributed. The result means that, as of September 2023, more than 7.7 million people were waiting for NHS treatment.
Amid ongoing economic uncertainty, it’s unlikely that the issues around NHS performance will be fixed in the short term. This begs the question as to whether utilisation trends will continue in line with extensive NHS waiting times, and how private medical waiting lists will be impacted in the future. It is becoming increasingly important to direct employees to seek preventive care.
3. Virtual GPs are increasing PMI utilisation
The prevalence of virtual GP services has risen sharply in recent years, enabling patients to swiftly access services including telephone and video consultations, advice, and private prescriptions. But these services are also increasing the utilisation of PMI offerings. Across the Lockton portfolio, 12% of claimants have made a virtual GP claim. Utilisation, meanwhile, is 3% higher among claimants with access to virtual GP services, compared to those without access.
Where virtual GPs do feature in PMI offerings,insurers advise that this is leading to a higher incidence of referrals to consultations and diagnostics than they would otherwise see when a member’s first point of contact is an NHS GP. Although evidence of this is currently anecdotal, it is an area that is under review. Virtual GP related claims are lower in value by their very nature, which has the result of lowering the average for all claims. However, this could mask the real driver of claims, and it is therefore essential that this is analysed.
By serving as a gateway to private healthcare services, virtual GP can be an effective tool in familiarising employees with their available benefits, and helping them to receive care quickly and easily. Younger demographics in particular have been shown to favour, and are becoming accustomed to, easy access points to health care (including virtual GP and private medical insurance). As such, utilisation of PMI is expected to be maintained as these individuals age, in contrary to current preference among older demographics to use the NHS. As suspected, Lockton data confirms that the GP access point of preference for over 60s is unaffected by the implementation of virtual GP, with patients in that age band favouring traditional face-to-face GP services.
Employers should prepare for this by encouraging effective and proactive usage of plans, tailoring communications according to their employee demographics.
4. More claims are arising from mental health
While musculoskeletal conditions and cancer are typically the most claimed-for as a proportion of total claims paid for each plan year, the prevalence of mental health claims is increasing. Mental health claims spend increased sharply during COVID-19, and has since remained higher than pre-pandemic, accounting for 10.4% of total claims paid at September 2023, compared to 3.5% in 2018.
Other conditions to increase as a proportion of total claims spend include respiratory systems disorders and obstetrics and gynaecology, both of which have surpassed pre-COVID-19 levels. This may be attributable to the effects of long-COVID-19 and the pause in cervical screening programmes during the pandemic, which may have caused delays in diagnosing potential issues.
To reiterate, employers should look to understand what’s driving claims cost and seek opportunities to drive early preventive measures.
Benefits for Breakfast – final conclusions
Lockton’s Benefits for Breakfast roundtable also featured a discussion led by Dr Richard Caddis, Director of Health & Wellbeing and Chief Medical Officer at BT Group, on the impact on employees of a fast-changing healthcare landscape.
Dr Caddis provided valuable insight on market trends which mirror the findings from Lockton data, noting that key areas for growth in the private sector include virtual GP and other technological innovations, such as AI. While there is significant growth in the medical field, Dr Caddis acknowledged that staffing shortages are likely to continue, with the impacts felt in both the NHS and private care. In particular, one topic to watch closely related to future government support for employers providing private healthcare initiatives, potentially by way of tax breaks.
In summary, although there is much uncertainty around the future of PMI claims trends (except that they will likely remain high), there are opportunities. By leveraging data, plan sponsors can look to shape claiming patterns and drive utilisation towards cost-saving mechanisms, such as virtual GP and preventive care. While this can increase overall plan utilisation, these can nevertheless be valuable tools to reduce per-claims cost and ensure care accessibility and peace of mind for members.
For further information, please visit our People Solutions (opens a new window) page, or contact:
Bella Desai, FIA – Lead Actuary
E: bella.desai@lockton.com
