Medical inflation?

 
For many years we have all accepted that medical inflation has been running well ahead of price increases in most other areas. Rates at, or around, 10% are regularly quoted by all the leading UK health insurers.

We think that this position is becoming increasingly untenable since the Government's NHS reforms radically changed the private health market. While falling waiting lists appear to be resulting in less use of the private sector by insured and self-pay patients, private hospitals have been filling their empty beds with NHS patients. Public sector business is high on volume, but the price that the Government is prepared to pay is drastically lower than the rates that the hospital owners have come to expect from their traditional market. This has resulted in some major restructuring and general cost-cutting among private providers.

So, if insurers are getting fewer claims and the ones that they do receive are costing less, should they not be assuming inflation rates very much lower than in previous times? We think so, and have been giving this message clearly to the major insurers. In support of our position, we have taken a close look at the actual claims experience of our larger clients and have calculated that average inflation, allowing for changes in excess and other "downtrading", is currently around 6%.

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For further information, please telephone your usual contact at Buck Consultants (Healthcare):

Tel: +44 (0)118 955 7700
Fax: +44 (0)118 955 7701
Email: healthcare@buckconsultants.com
Web: www.buckconsultants.co.uk
Abbot's House, Abbey Street, Reading, Berkshire, RG1 3BD, UK