Mercer report predicts employers will be hit hard as the rise continues
Employers buying medical plans as part of employee benefits will see large increases in the cost of the product over the next few years due to rampant inflation in the cost of medical treatments, according to a new report from group health intermediary Mercer.
The report predicted that a company medical plan costing £1m in 2008 will cost £1.6m in 2013.
The research, Rising costs, rising concerns: Medical inflation, reveals the price of treatment is rising by 10% each year, nearly three times the Bank of England's current inflation rate of 3.8%, with the cost of providing medical cover to employees and dependants having risen by 67% in just over a decade.
Steve Clements, principal of Mercer said: "There has been significant real investment in the NHS over recent years and a lot of people were expecting this to have a significant impact on demand for private medical insurance. But what we have seen in practice is that demand for the product has continued to be strong."
The report claims the driver of medical inflation until the beginning of 2003 was an increased incidence in claims by employees, and since then has been pushed by claims for complex treatments such as cancer care.
It was also outlined that some companies were linking access to treatment with NHS waiting times, increasing contribution levels and introducing medical underwriting in order to reduce costs. There was also, according to its authors, an increasing focus on wellness measures including motivating employees to live a healthier lifestyle.
