It is clear that medical inflation is having consequences, but what is causing it and what is to be done? Mike Izzard investigates.
Cash plans
A lot of intermediaries also act intelligently and offer best advice to clients by offering to set up a cash plan arrangement for those in the group sector. This can, in some cases, be used to ‘pre-fund' any relevant excess.
This means that the cash plan can go some way to mitigate any client liability, and it will also include other important benefits, such as optical and dental cover as well as an employee assistance programme which would typically include a stress helpline, and may even cover counselling as well.
In addition, the combined premium of the PMI plan with an excess plus the cash plan, is generally cheaper than the stand-alone PMI plan without an excess.
Another option is to adopt a six-week clause where the client agrees they will not be able to make a claim where the NHS can do the equivalent treatment within a six-week period following the initial consultation. In the past, this has effectively taken out most cancer treatments and other emergency conditions from being eligible under the policy as it effectively supports the NHS.
However, whether this will be affected going forward, with the impending 20% cuts across the board allegedly excluding cancer treatments in the NHS, remains to be seen. The premium cost reduction offered by most insurers to include this clause which effectively reduces the clients' choice, is approximately 10% and 30% depending upon the insurer.
There are other less obvious methods available to the specialist PMI intermediary to enable a client to mitigate any inflationary rise. Some are too involved to discuss in detail here but amongst the foremost is to gain approval from the client to remove or reduce some of the more expensive and less popular treatments, such as psychiatric cover, or to also use commercial and market pressures on the holding insurer with a view to securing a premium reduction if possible.
This is why many specialists are supportive of the initiative by Bupa, and other insurers like Simplyhealth, to introduce the open referral, directional claiming model as it will give more commercial control to the insurers over the cost of most treatments.
It will empower them to have greater, although conversely not total, control over the claims process. Insurers may well then delegate some of the decision on claims and ensuing treatments to the clinical specialist or the chosen hospital and in some cases a combination of both.
Eventually this will have the effect of reducing premiums and reducing medical inflation for the benefit of all concerned. It can only help to make the PMI industry more client focused and help establish a much more robust and enduring marketplace for all those concerned.
Mike Izzard is managing director of advisers Premier Choice Healthcare
