With access to dentists and opticians restricted during the pandemic, it’s been an interesting time for health cash plan providers. But, while claims levels have plummeted, these plans remain a popular employee benefits option.
As dental and optical are the two most claimed benefits on a cash plan, the news that dentists and opticians would have to close during the first lockdown will have concerned providers.
And, while restrictions were less onerous for the second and third lockdowns, appointments
for dental treatment remained as rare as the proverbial hens’ teeth. The latest dental statistics from the NHS, which were published in August 2021, show that 12 million courses of treatment were delivered in 2020/21 – a decrease of 69 per cent on the previous year.
Figures for eye tests are more difficult to pin down as so many are conducted in the private sector. However, a report from Specsavers shows that 4.3 million people missed their eye test in 2020, representing a 23 per cent decrease in the tests administered compared with 2019.
With fewer appointments available, claims on health cash plans dropped significantly. Figures from this year’s Workplace Protection & Wellbeing Report show that the average number of cash plan claims per member fell from 1.92 in 2019 to 1.25 in 2020.
Dental and optical benefits were particularly badly affected. Medicash finance and IT director Andy Roberts explains: “In 2020, claims for optical benefits were 15 per cent down on the previous year, while dental claims were down 42 per cent. Claims volumes for optical recovered quickly but people are still struggling to get an appointment with a dentist.”
The way in which optical and dental treatment is accessed explains the different performance. For most people, the NHS recommends an eye test every two years. This means that far fewer people will have had to cancel opticians’ appointments compared with the number of people who had to forego their six-monthly dental check-ups. “Cash plan policyholders can still use their optical benefit to pay for a contact lens subscription or to order a new pair of glasses,” Roberts adds.
Availability of dental appointments also slowed recovery. Strict rules are in place to control infection, which limit the number of patients a dentist can see. Human nature also plays a part in the slow catch-up, as Health Shield commercial director Paul Shires explains: “Lots of people put off seeing their dentist during the pandemic as they were nervous about the risk of infection. It’s still affecting claims volumes.”
Although policyholders might not be rushing back to the dentist’s chair, cash plan providers are reporting higher average dental claims in 2021. At Health Shield, the average dental claim is 17 per cent higher this year and Medicash has also seen claims inflation come through. “It’s difficult to know when we’ll get back to pre-pandemic claims volumes, but we are seeing higher average claims,” says Roberts. “Private treatment costs have increased and even with NHS patients, as they missed their regular check-ups, they might need more treatment when they do see their dentist.”
The cost of treatment has gone up too, across both NHS and private dentists. NHS charges increased by around 5 per cent, from £22.70 to £23.80 for band one treatment, to £282.80 for band three, up from £269.30.
Although this is only a small increase, higher costs will come through where delayed treatment pushes a policyholder into a higher band. For instance, although requiring two fillings instead of just one is covered by band two, if the tooth now requires a crown rather than a filling, the cost will increase from £65.20 to £282.80.
Policyholders seeing private dentists often felt more pain. “The cost of seeing a private dentist more or less doubled over the pandemic,” says Personal Healthcare Management owner Alan Mulligan.
As well as having to reduce the number of patients they see, the British Dental Association highlighted the additional costs that dentists are incurring for PPE. Back in June 2020, it found that where dentists were paying around 35-45 pence for the PPE required to treat a patient using aerosol-generating procedures before the pandemic, they were now paying as much as £30 for the required PPE.
PPE costs may have fallen since the height of the pandemic but Roberts doesn’t expect claims levels to return to normal just yet. “I believe we’ll see proportionately higher claims for the next couple of years as people catch up on treatment,” he says.
Against this backdrop, advisers are paying close attention to cash plan pricing. Although the drop in claims is offsetting the increase in the size of the average dental claim, there are concerns that prices will rise as normality returns. “There could be an increase in price,” says The Healthwise Group commercial director Paul Swanson. “Although dental and optical usage dropped, employees used other benefits more during the pandemic. It will be interesting to see how this trend continues.”
With dental and optical benefits effectively in lockdown during the early phase of the pandemic, there were concerns that it would reduce the appeal of health cash plans. But Mulligan says that employers were really understanding. “It wasn’t the cash plan provider that stopped employees seeing the dentist,” he adds. “Nothing was available.”
The providers worked hard to fill the gap too. As examples, Health Shield extended access to its employee assistance programme to all policyholders while Medicash rolled out its SkinVision, Phio and mProve apps to enable them to access virtual services. “There’s always been a lot of health and wellbeing services included on cash plans but it really gave employers a chance to support staff during the pandemic,” adds Mulligan. “Even the discount vouchers will have helped those worried about their finances.”
Although there are some signs that claims levels are returning to normal, Swanson believes the pandemic will change perceptions of cash plans forever. “Providers added so many other benefits that employers and employees may look beyond the dental and optical elements more,” he says. “This is positive; plans can be a real asset, rewarding employees but also, through services such as virtual GPs and mental health support, helping employers manage absence.”
This new image coupled with the pandemic-induced interest in health and wellbeing means many are predicting a bright future for the sector. Swanson says the conditions are ideal. “As we came out of lockdown, I’ve seen more companies looking at employee benefits, especially cash plans,” he explains. “Providing even the most basic level of cover is valuable when it can be so difficult to access healthcare.”
Shires agrees. “As well as a talent war, there’s going to be a rush into health and wellbeing as employers look to support staff in the hybrid working model,” he says. “Sales haven’t reached the pre-pandemic levels but I expect they will. Business owners are waiting for things to settle down first.”
Additionally, advisers are seeing interest from new areas of the market. For instance, Mulligan says that, with competition so strong for temporary staff, he’s been approached by employment agencies looking to offer a cash plan to the workers on their books. “People move between employment agencies for as little as 25p more an hour but, by giving them a cash plan, it really helps to retain them,” he says.
The pandemic may have proved to be something of a rollercoaster ride for the health cash plan sector, but by proving they’re about much more than dental and optical, it’s a ride that’s on an upward trajectory.