The business intelligence provider says the shift might be due to the continuing challenge of accessing NHS-funded care, which is pushing people toward private-funded alternatives for access, diagnosis, and treatment.
In total, 4.2m people were subscribed to medical cover schemes – once other people covered under the policies are included, this meant that 7.3m people were able to make use of private medical cover. This is the highest number since 2008.
Given growth in the UK population, penetration remains below 2008 levels (10.8 per cent of the population covered compared to 12.3 per cent in 2008) which speaks to the broader decline in coverage that took place following the 2008 financial crash and only began to recover in 2018.
Covid may have acted as a catalyst for a rapid increase in volumes, but the data suggests that challenges in accessing the NHS waiting list has been driving increased demand for medical cover since 2018.
LaingBuisson’s analysis of the NHS waiting list shows a relationship between medical cover subscriber volumes and the median wait time on the NHS. The injection of funding into the NHS in the early 2000s brought down waiting times substantially and was followed by a fall in the total number of people with medical cover. As waiting times remained comparatively low through most of the 2010s, medical cover volumes were steady, before beginning to increase alongside rises in the NHS waiting list from 2018.
Against the backdrop of challenges accessing NHS care, the value of the UK private health cover market reached an estimated £6.65bn in 2022, helping fund private medical treatment, health cash plan benefits and dental treatments. However, high inflation means that despite growth, the real-terms value of the market actually fell by 2.2 per cent.
Private medical cover
Private Medical Cover (PMI and company-paid self-insurance schemes) represented the largest segment at £5.32bn– up six per cent on 2021, and up 9.6 per cent since the last full year pre-pandemic (2019).
Private medical cover pays for about half of private hospital and specialist treatment carried out in the UK. Two-thirds of private medical cover is funded by employers as an employee benefit. The remaining third is paid by individual PMI policy holders.
Dental capitation plans and insurance schemes
Demand for dental cover products has grown steadily since 2007, and has been aided by long-standing issues in accessing public-pay dentistry, along with rising cost in the NHS co-pay for dental, which have helped to make coverage plans a more appealing option.
Since the pandemic, dental capitation subscriptions have grown at 4.6 per cent (2021) and 7.7 per cent (2022) to cover 2.7m people. Since 2007, the market value has grown from £454m to £688 million – at a pace that has allowed it to remain steady in real-terms, despite the recent backdrop of high inflation.
Demand for dental insurance, as measured by contributor numbers and persons covered, has seen recent record growth. The number of subscribers increased 23 per cent in 2021, and 22 per cent in 2022 – leading to more than 1.1m people covered under dental insurance. The market value of this segment has jumped to £180m (2022), up from £143m (2021) and £109m prior to the pandemic (2019).
Health cash plans
Premium income for health cash plans, which help to pay for ‘low ticket’ health expenses such as visits to dentists and opticians, was estimated at £461m in 2022. This halts successive years of decline in this market segment, which has fallen in value in both nominal and real-terms since 2018.
After a relatively stagnant period since 2009, total cash plan subscriber volumes have begun to grow. However, this has been driven exclusively by demand for company-paid health cash plans. Individual plan volumes have continued to fall and, unlike other segments, did not grow during the pandemic. At the same time, company-paid plans increased by 16.8 per cent in 2021 and 7.7 per cent in 2020 – offsetting any decline in individual plans, and leading to overall demand growth.
Tim Read, author of the 2024 report, said, “Despite a real-terms fall in overall market value, the broader picture for the health cover market is positive. Uplifts in subscriber volumes following the pandemic should translate to overall growth in market value as background inflation declines.
“LaingBuisson’s analysis shows a longer, deeper relationship between the length of the NHS waiting list and demand for health insurance. The pandemic may have driven increased demand, but it is misleading to suggest it is the cause of it. Demand began to increase in 2018, as the NHS waiting list began to rise out of control. This suggests that without substantial inroads into making NHS-funded care accessible within acceptable timescales for patients, health cover products will continue to grow in demand.
“There is a long way to go before coverage reaches levels last seen across the UK population since the 2008 financial crash, but it is the first time there has been sustained growth in the sector for more than 15 years.
“Growth is led by company-backed schemes, which may suggest an increased awareness of the impact of employee ill-health on a business – and possibly frustration at the impact that an inaccessible NHS is having on productivity. Investing in a product that enables people to see primary or secondary care specialists when they need to, rather than having a take a day off work hoping for an appointment, is no longer necessarily seen as a perk but as something critical to ongoing business success.”