Bupa have just announced their first bi-annual premium increase from the 1st April 2013 on their international 'Worldwide Health Options' plan. The rate adjustment sees Outpatient health insurance costs rising faster than Inpatient or Evacuation costs.
With the release of their bi-annual rates adjustments across all plans, clients on Bupa's Worldwide Health Options (BWHO) plan, specifically those who have chosen the "Medical Plus" module (outpatient consultations) will see an increase that is approximately 50% higher than the rest of the individual plans from Bupa. Though somewhat disappointing for those that do require the outpatient module, this targeted high increase is encouraging for clients who do not require the specific benefits included, ensuring their premiums remain steady.
One of the key components of the BWHO plan, when calculating the premium adjustments, is the ability to go into deeply specific details, drawing on complex data analysis to make targeted alterations. Unlike most other companies, which typically use wider parameters when looking at the claims history of certain groups, Bupa's immense size and experience in the market allows them to use a premium adjustment matrix that is exceptionally detailed and factors in specifics regarding age, location, excess levels and the plan module.
In terms of premium adjustments regarding age brackets, most companies generally use wide age brackets of about 5 years. For example, ages 20-24 would fall under the same age bracket, 25-29 under the next bracket and so on. From an analytical point of view, this method makes it easier to calculate when making annual premium adjustments as the wide brackets allow for simpler calculation means. The drawback to this however, is that this method always impacts the client as they will typically see dramatic increases according to age when they reach the next 'step' in age bracket. For Example, at the beginning of an age group, someone aged 25 in a 25-29 age bracket will be paying relatively higher premiums than they should for their age to balance out those at the older end of the spectrum within that specific bracket. Furthermore, though clients will be paying relatively lower premiums at age 29, they will then see a sudden and large increase upon entering the 30-34 age bracket and this can quickly become a financial burden.
To combat this issue, Bupa do not use wide age brackets but instead, the insurer calculates premiums according to every single year of age. Though this method is more time consuming when making adjustments, it does mean that every insured member is paying the correct premium according to their specific age and that each year, the adjustments made will be less severe resulting in a smaller financial burden for their clients to shoulder.
This specific analysis also rings true with Bupa when you look at the way they price different countries around the world. With 9 zones, this allows extremely specific data to be analysed according to the cost per regions. This array of different zones helps to protect clients' areas with lower, more stable costs for treatment from increased premiums caused by higher rising costs in other areas. This year's adjustment on the WMI module proves the accuracy of this system as all areas have relatively steady increases ranging from 6.24% to 6.74%. However, the WMP (outpatient) module has seen a much higher increase in the last 6 months with adjustments ranging from 9.56% to 10%. This has meant the total annual increase for the WMP module for the last 12 months is above 14%. This is counterbalanced on the other hand, by extremely minimal increases in the WME (medicines and equipment) and the WW (wellbeing and dental) modules that each saw an almost across the board increase of 0%, though some age groups increased by up to 3%. This brings the total annual increase to an average of just 4% for the last 12 months.
Further to location zones, Bupa also have a specific increase amount for each deductible chosen. In most cases, with other insurance companies a set 'standard' or 'basic' premium is issued and specific discounts exist for different excess levels. Whereas with Bupa, the performance of each specific deductible is reviewed then from this, the necessary adjustments can be made.
One of the methods Bupa use to try and keep annual adjustments fair relates to the actual modular design of the plan itself. Compared to most other companies whose plan designs are basic and inclusive of benefits such as Dental, annual health checks and medicines and equipment, Bupa have 5 separate modules that can be taken out individually, each with its own performance indications for the costs of treatment within that specific bracket.
These include; the WMI (Worldwide Medical insurance) that covers all inpatient treatment, the WMP (Medicines Plus) that covers outpatient consultations, the WME (medicines and equipment) covering prescription medication and equipment needed as an outpatient, the WW (wellbeing) that covers annual health checks and dental and finally the WE (Evacuation) module. These specific modules with specific treatments mean that if the costs for one treatment type increase, other non related treatment will not be affected. For example, other insurers may include dental as part of an outpatient plan, meaning that if the cost of a specific dental treatment increases, the costs for this entire plan will also increase and clients that do not use the plan for dental benefits will be negatively impacted.
This ability to show the specific performance of different types of treatment has helped Bupa to maintain generally steady increases over time. However, with this year showing a large premium increase for outpatient consultation modules, clients requiring this benefit will undoubtedly be disappointed. Pacific Prime analysts expect that next year's adjustment for this particular plan will be minimal and if not, Bupa may need to reconsider the plan design if certain benefits within the WMP continue to cause high increases in premiums and affect clients not using those specific benefits within the WMP module.