In the latest data, released this week by LaingBuisson, there may be some good news for the UK's private healthcare sector. Historically, the main driver of patient throughput into most private hospitals has been private medical insurance (PMI). But PMI has been in decline or stagnant for many years. Insurance coverage peaked in 2008 in the UK. Since then, the number of people covered by corporate or individual insurance schemes has fallen. Currently, LaingBuisson estimate that 10.6% of the population are covered by health insurance. The rising cost of private healthcare has been a significant factor.
The latest figures from LaingBuisson (for 2015) state that the number of private medical cover subscriber policies in the UK actually grew by 2.1% to reach 4 million! That follows the stagnant market from 2012 to 2014 and shrinking demand from 2008 to 2011. LaingBuisson include Private Medical Insurance (PMI) as well as corporate self-insured schemes, known as Healthcare Trusts, in their numbers.
Where's the growth coming from?
The growth was driven largely by an 8% increase in the number of subscribers to self-insured (Healthcare Trust) schemes operated by a few very large corporate schemes. Company paid policies account for just over three-quarters (76.3%) of the total market, representing 3,070,000 subscribers at the end of 2015. The number of subscribers within corporates (both insured and self-insured) increased strongly by 3.4%.
In contrast, the number of non-corporate individual subscribers continued to decline, falling by 1.7% to 952,000. This increase in the number of people who are opting out of paying for their own health insurance may be offset by the resilience of the self pay market. It is believed that more people are deciding to use cash from savings and investments to fund their private treatment on an "as needed" basis.
According to LaingBuisson, claims paid to private medical cover subscribers in 2015 were valued at £3.6bn, including £2.9bn paid to insured claimants, and £688m paid to claimants covered by self-insured schemes. Total spending on private medical cover (insured and self-insured Healthcare Trusts) grew by 2.8% in 2015 to reach £4.7bn.
What does the future hold?
Who knows....? These 2015 figures are encouraging. But increases in Insurance Premium Tax are going to deflate the market.
Philip Blackburn at LaingBuisson believes:
“A sharp increase in IPT from 6% to 9.5% effective from November 2015, and further rise to 10% from November 2016 has loaded significant additional cost for all medical insurance customers. A further hike to 12% in June 2017 will tighten this 'taxation straitjacket', and in an industry where affordability has been identified as the primary reason for a lack of growth in demand, this hefty additional burden is likely to mean demand for PMI is vulnerable going forward, but this may be balanced by a shift to Healthcare Trusts.”
The post-Brexit economy may mean that corporates and individuals tighten their belts and that there's less money around for private healthcare. On a positive note, bad news for the NHS means good news for the private sector. Restrictions on NHS treatment and increased waiting lists will no doubt drive more people down the self pay route for private treatment, but it's unlikely we'll see a return to the 2008 levels of health insurance coverage in the UK.