The cost of living problem has impacted us in a way that has never been seen before, and it is having an impact on individuals and businesses all around the world, not just in the UK. Europe was impacted by the Ukrainian crisis as we were recuperating from the Coronavirus outbreak, which has increased the negative financial effects on economies around the world. Prices for electricity, food, and fuel are all rising, and we can anticipate long-term effects on the price of services like healthcare.
Here, Laurent Pochat-Cottilloux, CEO of AXA Life & Health Reinsurance Solutions, and Nigel Oliver, Global Head of Commercial and Underwriting at AXA Global Healthcare, discuss how the cost of living crisis is affecting health insurance customers and how it is affecting the cost of healthcare globally. They also discuss what the future may hold for the IPMI sector.
How do cost-of-living increases generally affect the price of healthcare?
Laurent:
“Everything was put on hold for a while during the epidemic, so today many healthcare providers are attempting to make up for lost income from the previous two years, during which time private healthcare providers either lost money or didn’t turn a profit. As a result, some private hospitals, clinics, and physicians have raised their prices, but this is common practice in the healthcare industry as providers respond to inflation and the general state of the economy.
Nigel:
Future healthcare prices will also be affected by supply chain strain. As medical inflation is typically delayed, the effects of the hike in the CPI (Consumer Price Index) have not yet been felt. Most medical expenses are covered by contracts, which are often revised yearly.
Additionally, there is rising employee unrest in hospitals. As workers demand more pay because they simply cannot afford to pay their expenses, we are seeing an increase in strikes across a variety of industries. That naturally includes everyone who works in hospitals, as well as those who are further down the supply chain, including truck drivers who bring personal protective equipment or blood.
Which nations have been affected most and least?
Laurent:
“Countries that depend more heavily on importing grain from Ukraine and Russian energy are likely to be the most negatively affected, in my opinion. Even nations with a good supply will be impacted by the general increase in the price of a barrel of crude oil as a result of limited supply but high demand, but wholesale markets are driven by the cost of production.
On the other hand, Middle Eastern nations with substantial oil reserves are likely to be less affected. However, the majority of nations will be unable to escape some of the effects of the supply chain’s rising costs.
There are always exceptions to the rule, despite all of this. Due to the exodus of several expats after China’s borders were closed, there is currently an excess of foreign private healthcare providers in China. Private service providers are now vying with one another for lost market share as a result, offering more aggressive pricing. Therefore, the price of private healthcare for the wealthy market in China is really declining!
Has the cost of living increased consumer behavior or views toward private vs. public healthcare, especially given that access to public healthcare is still problematic after COVID because of backlogs?
Laurent:
“Many users of private healthcare will now base their decisions on the many services they receive from their plan. Private healthcare is now seen as more of a need by a large portion of the global middle class. The least priced policy they can get away with while yet protecting them is more likely to be chosen by them. People will continue to be encouraged to choose private health care after seeing how their public systems were soon overwhelmed by the pandemic.
Nigel:
It’s also important to consider employers who offer their staff international private medical insurance. Healthcare coverage is sought after and valued by corporate clients as a perk that will aid in luring and keeping employees.
Since firms will be trying to better manage their finances and lessen the effects of inflation on business, there will undoubtedly be pressure from above on insurance managers and HR to control their expenses as effectively as possible. Businesses will probably turn to suppliers for cost-effective healthcare coverage that doesn’t sacrifice care quality. This might be accomplished through more affordable services like virtual care. In the corporate world, it is typically quite challenging to revoke benefits after they have been granted. Additionally, not just money will draw the top talent if you’re trying to recruit them.
What do you foresee happening to the expense of healthcare globally over the coming few years?
Laurent:
“Overall, because rising costs are a given in every sector of the economy, there will inevitably be a change in the demand for health insurance. However, given that foreign healthcare is now more frequently viewed as a necessity and is consequently valued more highly by both employees and families, we anticipate that consumers will choose a less expensive alternative rather than canceling their healthcare plan. Although it is impossible to foresee what the financial future may contain, the market is now robust, and we are dedicated to providing our clients with the finest healthcare available.
