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NHS reform will increase usage of PMI schemes, says Mercer

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Government changes to NHS reform will still result in increased usage of private medical schemes, putting an upward pressure on company premiums, says consultant Mercer.

The Health and Social Care Bill announced by the coalition government on 19 January 2011 has received widespread opposition from GPs, hospitals, consultants and other interested parties.

Earlier this week, the Government announced it would be changing many of the initiatives that were to be implemented, following recommendations from the NHS Future Forum. According to Mercer, despite the proposed changes, companies should continue to prepare for further increases in corporate healthcare costs. GP consortia will work with healthcare professionals to ensure the most effective multi-professional involvement in the design and commissioning of services.

Consortia will also not take on the full range of responsibilities by April 2013, but when they have the right skills, capacity and capability to do so. Despite these changes, Mercer believes that giving these consortia control over budgets may still affect the quality of care and the length of waiting lists.

According to Naomi Saragoussi, principal in Mercer's health and benefits business: "The devil is in the detail. While the Government has accepted the criticism of its policies and the plans to make the NHS more competitive appear to have been watered down, some areas lack clarity. It may be difficult for the consortia not to take a more commercial approach and prioritise more cost-effective treatments, despite their good intentions. We will have to wait and see."

Mercer says companies are already experiencing rocketing medical costs. The company's European Health and Benefits Report, published this week, showed UK medical inflation - the cost of providing healthcare and health-related benefits to employees - increased by 4.9% in 2010.

This follows increases in 2009 and 2008 of 6% and 10% respectively. While these rises are partly due to the impact of increased longevity and the growing costs of cancer care, the current programme of NHS reform will add to these inflationary pressures as the changes come into force.

Saragoussi added: "We are still concerned that the expanded GP consortia will not necessarily have the financial experience and skills to manage these large budgets. Clinicians will instead need to employ qualified staff or buy in support from external organisations, including private and voluntary sector bodies. Given that many of these will be experts from the PCTs, one wonders if the cost savings and reduction in bureaucracy will be as great as is anticipated."