Private medical insurance – The true cost of medical insurance

This piece I wrote for HR Magazine about Private Medical Insurance is live online. (It has been since December but I don’t always find out when features written for print mags make it onto the interweb)

With costs rising dramatically, there are fears that private health cover will go the same way as final-salary pension schemes. Andrew Donaghue reports.

Proud as the UK is of the NHS, it seems many companies still see state-funded health treatment as a potential black hole when it comes to lost productivity. Around 90% of UK businesses claim to offer private medical cover to some of their staff and spend on average around 7% of their total payroll costs on health benefits. Private cover is seen not only as a way to speed up treatment for staff but also an important perk.

But despite the popularity of private medical insurance (PMI), it is a benefit under siege. According to a recent report from financial services specialist Mercer, the cost of providing health benefits rose by an average of 5% in 2007. Further research conducted by the company in July this year, revealed that medical cover inflation is running at 10%, which means a plan that cost a company £1 million in 2008 could cost up to 60% more in five years’ time.

 

The result is that PMI could face the same fate as final-salary pensions, eventually becoming unsustainable for most companies to offer, unless there are radical changes in the structure and comprehensiveness of plans.

For more go to HR Magazine.

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