Large employers are being even tighter with their budgets when it comes to their healthcare spend and, as Edmund Tirbutt reports, are crying out for some innovative thinking
It always comes as something of a relief when the major players in a murky area agree on most of the main trends and developments, as is currently the case in the large private medical insurance (PMI) market – for schemes with over 1,000 members. The field so lacks objective research or indeed any other attempt at transparency that there is little any journalist can do to shed much light on hotly contested claims or accusations.
Point of agreement number one among the major providers and intermediaries is that virtually all employers at this end of the market are seeking to squeeze every last ounce of value out of their scheme arrangements, and they are increasingly being assisted in their task at renewal by professional procurement departments – who have brought a whole new focus to addressing inefficiencies and assessing costs.
Nevertheless, point of agreement number two is that, unlike in the SME market, this appetite for penny pinching virtually never results in schemes being cancelled and rarely sees them even switch provider.
Stuart Scullion, sales and marketing director at national specialist intermediary The Private Health Partnership, says: “There are not many switches at this end but a point in negotiations is often reached when the insurer won’t go down any further and, at that point, in our experience the employer normally stays. The most dramatic approach we’ve had has been from a few very hard up large schemes that have reduced the numbers of employees eligible. In the SME market, on the other hand, we have some clients who will switch to save £100 a year in premium.”
The furthest that most employers have been going has been to tweak benefits. Those willing to tolerate excesses have in some cases been prepared to increase them marginally, most commonly from £100 to £150. Others have been prepared to limit outpatient cover to £1,000 or £1,500 or to switch from using hospital list A to list B or C – or to keep list A or B for executives and relegate the remainder to list C.
Paul Moulton, director of sales and client relationships at insurer AXA PPP healthcare, says: “At the large end we have had no-one cancelling but we have seen the same thing happening everywhere in that the number of lives covered has declined marginally. There was a flurry of redundancies in late 2008 to early 2009 and now it’s more a question of not replacing leavers, so we’ve probably only been seeing a 2% to 3% drop in scheme numbers over the last year.
“Rebroking at this end of the market has traditionally taken place every three years but now some employers are doing it annually and others biannually. There is a definite trend towards putting large PMI schemes into flex arrangements, as opposed to cancelling them, and giving employees the option to upgrade and, less commonly downgrade, from a core level of cover.”