The mystery behind medical inflation

27 August 2018

You can’t put a price on the health of yourself and those around you. The rising costs of healthcare around the world are causing quite the buzz in the world of International health insurance, so we’ve taken a closer look at why the cost of healthcare continues to increase.

What is medical inflation? 

If you’ve ever had health insurance, someone will have probably told you that one of the reasons your price has increased is because of medical inflation, but what does it actually mean? The term ‘medical inflation’ refers to medical trends and developments, and the increase in cost to support them. This often includes the cost of advances in treatments and procedures, and the increased availability and usage of them around the world. 

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Treatment is getting more expensive

New drugs, new treatments, new technology - these lifesaving innovations are great news and help to make healthcare more effective. It means that we’ve have never had a better chance at surviving serious illness, such as heart disease and cancer; however, it all comes at a cost. 

The benefits of these developments could one day save your life or the life of a loved one, so it goes without saying that the benefits outweigh the negatives here.

We are living longer

The global population is ageing – in countries like Germany, Italy and Japan, over one fifth of the population is already over the age of 65, making them “super aged” societies. And by 2020, there are likely to be 13 of these societies around the world, with the majority in Europe. 

With age, often comes illness, so with such a large proportion of the global population over the age of 65, we expect to see more people relying on their health insurance to help with their conditions as they get older. 

We are getting bigger

Life is busier than ever and even though we know what is and isn’t good for us, convenience will often win. And with so many ‘fast food’ options that can be delivered straight to your door, the healthier alternatives are often overlooked. Obesity and a lack of physical activity is commonplace in many countries around the world but it also adds extra pressure to healthcare systems, costing them more and more each year. 

What are we doing about it?

The rising cost of new medicines, treatments and technology is unavoidable and we have to take these changes into account to make sure we can always offer customers access to the new drugs and quality treatment they expect.

One way we are doing our bit to limit the impact of these increasing costs is by having a global network of medical providers, meaning we can monitor the cost of treatment. It also means we’ve been able to negotiate on costs for some of our providers, which is good news.

We also work hard to protect our customers by trying to stop the misuse of our policies. In 2017, we saved £12.2m by preventing incorrect and fraudulent claims. We work hard to monitor invoices to make sure that we are only paying for treatment that is medically necessary and correct. Our customers work hard to earn their money; we work hard to look after it.