Employees could soon see their company health insurance schemes suffer the same fate as their final salary pension schemes, with the cost of providing private medical cover for staff set to soar by 70% during the next five years, a healthcare consultancy warned today.

Buck & Willis Healthcare said the additional £1.1bn bill faced by businesses could cause employers to close the schemes down in the same way many have done with their costly pension schemes.

The health plans, which currently cost businesses £1.6bn a year, cover the cost of private medical treatment if policyholders need to see a doctor or have an operation. But Buck & Willis warned that the rising cost of the schemes could force companies to restrict how much they pay towards them. It estimates the cost of the plans will increase by £380 to £930 per employee for companies with 100 or more staff during the next five years if medical costs rise at their predicted rate of 11% a year. "Employers need to take action now to prevent the cost of medical benefits escalating out of control, or the existence of company medical plans could be threatened," said Adam Norris, managing director of Buck & Willis.

"These spiralling liabilities could see medical plans going the same way as final salary pension schemes."

Mr Norris said he expected companies to increasingly look to reduce the cost of the plans by introducing defined liability schemes which, for example, require staff to pay the first £100 of any claim. Around 4.5m people in the UK have private medical cover for themselves and their families. Around 60% of these schemes are paid for by companies and a further 10% are sponsored by firms with employees making a contribution.