The biggest factor of rising costs in any market, be it healthcare, agriculture or any other type of trade, is inflation. In the last 20 years, inflation has resulted in the costs of everyday goods and services doubling. However, medical inflation has risen far more steeply; approximately twice the normal rate of inflation.

A replacement hip cost approximately £230 in 1989, but in 2009, patients pay around £880, and it begs the question; what’s so different about healthcare from other industries?

The answer is that medical inflation isn’t just about inflation. Healthcare is in demand – people are getting older, living longer and indulging in unhealthy lifestyles. This inevitably leads to more people suffering chronic health conditions, and considering the costs of medical research and development, and it’s not hard to see where the price hikes come from.

Getting older…
We live in a world where the population has grown almost six fold in the last 100 years. This in itself puts a strain on healthcare, with the manifold increase in demand simply making it more expensive, but there’s an even bigger issue. Part of the reason for our growing population is that people are living longer than ever before. This effect is felt twice; once in terms of increased headcount, and again with the increasing demands on healthcare that come with ageing.

…and fatter
Lifestyle factors, like eating an unhealthy diet, smoking, not taking enough exercise and drinking too much alcohol, all take their toll on our bodies and healthcare costs. We’re in the midst of a global obesity epidemic – ‘The Globesity Crisis’. Obesity isn’t just a problem in the West; developing countries are also feeling the effects. With a population of 1.5bn, if just 10 percent of the Chinese population becomes obese (as is fast happening), that means
150m people with significantly worse health.

Cancer is on the up
In the past, for many a diagnosis of cancer was a death sentence. But rather than dying from cancers, we’re now living with them, which all comes at a price. Treatments are extremely costly and often long courses of therapy are needed.

Medical advances
Medicine has made huge technological advances in recent years. There may be more people with chronic health conditions, but they’re no longer dying from them, however, the drugs and medical developments needed to make this possible don’t come cheap. In 2007, the US pharmaceutical industry spent almost $59bn on drug research and development despite that only two out of every 10 drugs that make it to the market ever produce enough revenue to match their costs.

Keeping premiums affordable
As a medical insurance company, Bupa are undoubtedly affected by these rising costs, but using hospital accreditation schemes, case managing patient care and by looking at clinical outcomes, they’re trying hard to sustain costs without compromising on quality.

Contact: Tel: +44 (0)1273 322 070; Web: www.bupa-intl.com; Email: advice@bupa-intl.com