11 January 2023

The cost-of-living crisis and the pressures of inflation are making headlines daily. Around the globe In both the UK and Japan inflation has hit a 40 year high. The USA has fared better, but is still hovering around 8 percent. The knock-on effects hit every part of the economy, for consumers and businesses alike


Medical inflation refers to an increase in claims, new trends, advances in medical technology and the associated increase in costs. It is typically higher than the base rate of inflation. However, there are reports that medical inflation was actually lower than general inflation earlier this year*.

Some commentators pointed to ‘a mystery’  that medical inflation was being outpaced by soaring  rates of general inflation. While the current accepted market rate of medical inflation in the UK continues to run at approximately 6%-8%, it is expected to rise in the next year. Some analysts predict that global medical inflation could be as much as 10% in 2023. 

The drivers are not just associated with general inflation. A dynamic labour market coupled with a lack of available staff is expected to worsen over the next five years. In the USA alone, it is expected that there will be a gap of as many as 450,000 nurses and 80,000 doctors by 2025. As demand grows labour costs are expected to be above inflation over the next two years and could be as much as 10 percent.

Another factor is that there is still a backlog because of Covid. Where private hospitals supported the NHS by offering their facilities to the public to help care for those affected by the virus. This meant that people with Private Medical Insurance have seen delays to their treatment. However, the UK insurance market is now starting to achieve pre-Covid levels of approved claims and treatment in the Private Medical sector.

Rising medical inflation will be a hot topic for discussion in 2023. While private medical cover reduces the burden on the sterling work of the NHS, rising costs will create debate between Financial and HR directors on the sustainability of company sponsored arrangements. The finance team will be questioning whether cover is becoming unaffordable, while human resources will counter that it could be more costly in terms of employee wellbeing, not to make the investment.


What next?

At Verlingue we focus on getting to know your business and what you want to achieve through your Employee Benefits package. Whatever your needs, we can design an innovative solution for your unique requirements.



*Transformative impact of inflation on the healthcare sector | McKinsey


Mark Pugh

M: +44 (0) 7920 429 075

E: Mark.pugh@verlingue.co.uk