A variety of cost control mechanisms are available on standard plans to help make premiums more affordable. These include excesses and co-insurance, where the policyholder pays part of their claim costs; and six-week plans, where treatment is available where the NHS waiting list is longer than six weeks.
However, over the past 18 months, several insurers have launched entry-level products to make cover more affordable and target younger customers. These employ a variety of strategies to curb the cost of cover.
Exeter Family Friendly was one of the first into the market with its Health Essentials for Me plan. This is designed to address consumers’ fears around waiting times for operations and procedures on the NHS.
To achieve this, it provides cover for in-patient and day-patient surgery and treatment but excludes diagnosis and consultations. Customers can also add in unlimited cover for cancer and choose to increase the excess, which is automatically set at £100.
Also cutting back the benefits it offers is Bupa on its Fundamentals plan, which was launched through intermediaries in July. This provides full in-patient cover and diagnostic tests but only offers a maximum of two consultations a year.
In addition, benefit for physiotherapy and other physical therapies is restricted to £350 a year and can only be accessed to support recovery from in-patient and day-patient treatment. By clamping down on excessive claims for physiotherapy in this way, the plan is not only more affordable but also helps to make prices sustainable over the long-term by changing policyholder behaviour.
While these plans might restrict treatment, Stuart Scullion, commercial director at Punter Southall Health & Protection and chairman of the Association of Medical Insurers and Intermediaries, says this is a practical way to bring down the cost of cover. “A policyholder could take out a cash plan to cover restricted benefits such as consultations or physiotherapy,” he says. “Or they could just view the cost of the excluded benefits in a similar way to an excess.”
Take Exeter Family Friendly’s plan, which excludes specialist consultations as an example. The price of these varies but are typically between £150 and £250, which is a manageable cost if someone wants see a specialist quickly.
While restricting cover to more significant healthcare expenses such as in-patient cover is one option, CS Healthcare cuts the cost of its HealthBridge plan a different way. Policyholders can access a full range of treatments, including consultations and diagnostics, but it caps the amount they can claim in any policy year to £15,000.
Within this limit there is a cap of £1,000 on consultations and diagnostic tests and investigations and there is also a compulsory co-payment feature, capped at £250 per person a year. Russell Stephens, director of marketing, distribution and membership services at the group, explains the thinking behind the plan: “Our research found that people were happy to turn to the NHS for the big ticket items such as cancer and heart disease, which are its areas of expertise, but they wanted to be able to access treatment for the more routine procedures quickly and easily. The annual benefit limit will cover many of these procedures.”