Peak Bodies Call for Health Insurance Premium Round Reform
Private health sector peak bodies have come together to call for urgent reforms to the annual health insurance premium round to ensure the struggling private health system remains viable.
The Australian Private Hospitals Association (APHA), Catholic Health Australia (CHA), and the Medical Technology Association of Australia (MTAA) have jointly written to Health Minister Mark Butler calling for changes to the process which decides the annual increase to premiums.
The letter presents data showing health insurers are returning less and less to patients through hospital and prostheses benefits yet are banking record profits and spending more on themselves through management expenses than ever before.
The peak bodies are calling for reforms that would see more money flow from insurers into hospitals and their patients.
The proposed reforms are:
- Establish an independent body to oversee insurer behaviours that are threatening the viability of the system and the value of private health insurance for consumers;
- Implement a cap on capital requirements to compel insurers to free up excessive reserves of capital to support the struggling private health system; and
- Incorporate the increasing cost of delivering care as well as acknowledge push factors such as insurer profits and management expenses in the 2025 premium round process.
APHA CEO Brett Heffernan said:
“It’s a matter of public record that health insurers reaped a record $2 billion profit last year, and this year are looking to rake in even more having pocketed $800 million in the first quarter of 2024 alone. Damningly, over this period, the benefits (payments) to private hospitals actually fell. That tells you all you need to know.
“Without some mechanism that ties premium increases to payments for care in private hospitals, any premium hike is just extra profit in insurance company coffers. That’s not why any of us take out private health insurance.”
Catholic Health Australia CEO Jason Kara said:
“The data is crystal clear: insurers are making ever bigger profits while returning less and less to patients and hospitals.
“This imbalance is threatening the viability of private hospitals, which play a crucial role in alleviating pressure on the public system. Reforming the premium round is a sensible way to ensure the system delivers for hospitals and patients, not just insurers.”
MTAA CEO Ian Burgess said:
“The APRA data analysis shows Australia’s MedTech industry has delivered more than $2.5 billion in savings to health insurers since 2017 – savings insurers are yet to pass on in full to consumers.
“Claims by the corporate health insurer lobby that medical devices (through the Prescribed List) were to blame for increased pressure on premiums has been resoundingly refuted by health sector stakeholders. It’s time government acted to stop insurers from raking in record profits during a cost-of-living crisis, and put in place safeguards to ensure patients, not corporate health insurers profits, are put first.”
