Why is PMI usage going up and is it sustainable?
It’s clear that the health insurance industry has changed almost beyond recognition over the past five years.
We’ve witnessed unprecedented growth in demand for access to care and, as a result, private medical insurance (PMI) has evolved to meet the changing needs of consumers.
With this, the perception and expectation of health insurance has also shifted. People are no longer seeing PMI as something they have and don’t use, until they need to claim. If they have it, employees today are using it more than ever before.
Value from day one
The reason for this is that expanding services are resonating strongly with those with PMI, in line with rising healthcare demand across the board.
Recent data from the ABI shows that the use of virtual GPs increased almost 800% between 2019 and 2022, while mental health support and physiotherapy have risen 140% and 27% respectively. Everyday care services now account for over 60% of all Vitality health insurance claims.
What this means is that employees are getting far more immediate value from their employer-led health insurance benefits, especially as employees have become more aware of what’s available to them from day one and as their needs have changed.
Where historically PMI served to supplement the NHS, focusing mainly on secondary and tertiary care, it now offers everything from preventative lifestyle support to screening to everyday care, such as virtual GPs, physiotherapy, as well as CBT and counselling.
A new era for health insurance has emerged in the form of healthcare in the palm of our hand, offering access to wellbeing tools, screening and primary care services on demand, as part of integrated pathways, over and above wrap-around NHS care.
Managing demand
In light of this, we’ve needed to find more sustainable ways to deliver healthcare to keep pressure on premiums to a minimum, especially in the face of high medical inflation.
By integrating everyday care services into the wider healthcare ecosystem and developing digital pathways to manage demand, we can not only ensure employees are directed to the most appropriate care, but also keep costs down.
Through our Vitality GP app data, we can see that more than half of GP consultations can be managed in an everyday care environment, while under 25% require an onward referral to a specialist, or diagnostics1.
Meanwhile, we are seeing more than 50% of all care requests starting online, through the Vitality app and our Care Hub1. By allowing members to use this to self-refer for physiotherapy and Talking Therapies, we are also avoiding thousands of unnecessary GP interactions each year. This is helping to drive operational efficiencies, freeing up our capacity for specialist claims teams to service more complex needs.
It's also important not to view everyday care as ancillary services that purely drive up costs either. When delivered in the right way, cognitive behavioural therapy (CBT) or physiotherapy allow for earlier intervention, which helps improve patient outcomes and avoid long-term costs.
Since 2019, Vitality’s physiotherapy claims have increased by 35%, but we have seen in-patient musculoskeletal claims reduce 31%1. Even more staggering is that Talking Therapies usage has risen 179% during the same period, however in-patient admissions have fallen almost 70%1. Because these upstream services can be delivered at a fraction of the cost of more treatment for more severe conditions, they are not only better for our customers, but they make business sense too.
Embedding prevention
Another factor impacting rising PMI costs is the underlying poor health of the UK population. With almost one in five adults in the country predicted to be living with a major illness by 2040, this challenge is not going away.
Encouragingly though, we’re seeing firsthand through the Vitality programme that positive behaviour change is possible. The proof is in our data. Those who engage in the Vitality programme, on average, incur 28% lower healthcare costs than those who don’t. They also live three years longer2.
In our most recent Britain’s Healthiest Workplace data, we’ve also seen that heathier employees are more productive – reducing absenteeism and presenteeism - at a time when the UK is losing a significant amount due to ill-health each year due to economic inactivity (£138bn per year).
By embedding prevention into PMI, not only is this beneficial to the long-term health of our members and workplaces too, it’s also good for us as an insurer because it helps us manage claims costs over time. This means we can return more to our members via their employer, in the form of compelling rewards and partners, which in turn incentivise positive lifestyle choices, ensuring that the value-exchange continues.
Ultimately, so we can continue to meet high demand, help keep costs down and actually make the UK healthier in a way that is more sustainable over the long-term.
Dr Katie Tryon recently explored this topic at the REBA Congress in her session ‘Rethinking wellbeing: why a box-ticking exercise is not enough’. Watch below.
In partnership with Vitality
At Vitality, we take a unique approach to insurance. As well as providing high-quality comprehensive cover, we provide a complete wellness package that can help boost employee engagement and productivity.
