How is the cost of living crisis impacting global healthcare?

Nigel Oliver, Global Head of Commercial and Underwriting at AXA Global Healthcare, and Laurent Pochat-Cottilloux, CEO of AXA Life & Health Reinsurance Solutions, discuss how the cost of living crisis is affecting healthcare around the world, the impact it’s having on health insurance customers and what might be in store for the IPMI industry
The cost of living crisis has hit us in an unprecedented way, and the impact extends beyond just the UK – people and businesses are being affected worldwide. Just as we were recovering from the pandemic, Europe was hit by the Ukraine crisis, which has amplified the negative financial impact on economies globally. Fuel, food and energy prices are all rising, and we can expect long-term impacts on the cost of services like healthcare as well.
In general terms, how is the industry currently responding?
Laurent: “During the pandemic, everything was on hold for a while, so medical providers are now trying to recoup lost income from the past two years, when private healthcare providers either lost revenue or didn’t make a profit. As a result, we’ve seen some private hospitals, clinics and doctors increasing fees, but this occurs quite regularly in the healthcare market as providers adjust to inflation and the economy.”
Nigel: “Strain in the supply chain will be reflected in future healthcare costs too. We’re yet to see the impact of the rise in CPI (Consumer Price Index), as medical inflation is usually delayed. Most medical costs are contracted, and these are usually updated annually.
“There’s also increasing unrest at a workforce level within hospitals. We’re seeing an increasing number of strikes across sectors, as employees seek higher wages because they simply can’t afford to pay their bills. That, of course, will include everyone in hospitals themselves, but also those further down the supply chain, such as lorry drivers who deliver personal protective equipment or those who transport blood.”
Which are the most and least impacted countries?
Laurent: “I’d say those most impacted are mainly ones that have a greater reliance on energy through Russia and grain imports from Ukraine. However, as wholesale markets are driven by the cost of production, even countries with good supply will be affected by the general increase in the price of a barrel of crude oil from low supply, but high demand.
“On the other hand, countries less likely to be affected are probably those in the Middle East with strong reserves of oil. But for most, there will be no way of avoiding some of the consequences of rising costs in the supply chain.
“Despite all this, there are always exceptions to the rule. Currently, there is a surplus of international private healthcare providers in China, due to the departure of many expats following the closure of its borders. As a result, private providers are competing with each other to regain market share, therefore providing more competitive prices. So, the cost of private healthcare in China for the high-end market is actually on a downward trend!”
Countries less likely to be affected are probably those in the Middle East with strong reserves of oil

Is there a shift in consumer behaviour or attitudes towards private vs public healthcare, particularly as the public option is still difficult to access post-Covid due to backlogs?
Laurent: “A lot of private healthcare customers will now make choices according to the different services they get from their plan. For many of the world’s middle-class segment, private healthcare is considered as more of a necessity now. They’re more likely to purchase the least expensive policy they can possibly get away with, but one that will still protect them. Having seen how public systems were quickly overwhelmed by the pandemic, this encourages people to use private healthcare.”
Nigel: “It’s also worth looking at companies supplying international private medical insurance to their employees. Corporate customers are looking for healthcare cover to help attract and retain talent, as a desired and valued benefit.
“Of course, there will be pressure from above on insurance managers and HR to control costs as efficiently as possible because corporations will be looking to manage finances better and reduce the impact of inflation on business. It’s likely that businesses will look to providers for affordable healthcare coverage, without compromising the level of care. This could be through more cost-effective services like virtual care. Generally speaking in the corporate world, it is incredibly difficult to take benefits away from people once they’ve been offered. And if you’re fighting to attract the best talent, money isn’t the only thing that will attract them.”
Looking ahead to the next few years, what do you predict might happen to the cost of healthcare globally?
Laurent: “Overall, economic uncertainty is bound to cause a shift in the demand for health insurance, as rising costs are inevitable, regardless of the industry. However, as international healthcare is considered more of a necessity now and is therefore a better valued benefit for employees and families, we expect people to opt for a more affordable option instead of cancelling their healthcare plan. It is impossible to predict what the financial future might hold, but for now, the market remains strong, and we’re committed as ever to delivering the best healthcare service to our customers.”