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Health peak bodies seek urgent insurance premium reforms

Monday 28th October, 2024

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 healthcare 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 throughhospital and prostheses benefits, but are banking record profits and spending more on themselves through management expenses than ever before.

"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," APHA CEO Brett Heffernan said.

"Damningly, over this period, the benefits (payments) to private hospitalsactually fell. That tells you all you need to know."

The peak bodies are calling for three reforms that would see more money flow from insurers intohospitals and their patients:

Establish an independent body to oversee insurer behaviours that are threatening theviability of the system and the value of private health insurance for consumers.
Implement a cap on capital requirements to compel insurers to free up excessivereserves of capital to support the struggling private health system.
Incorporate the increasing cost of delivering care as well as acknowledge push factorssuch as insurer profits and management expenses in the 2025 premium round process.

"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," Mr Heffernan said.

CHA CEO Jason Kara said the imbalance of insurers' soaring profits was threatening the viability of private hospitals, which have a key role to play in relieving pressure on the public health system.

"Reforming the premium round is a sensible way to ensure the system delivers for hospitals and patients, not just insurers," Mr Kara said.

MTAA CEO Ian Burgess said health insurers had failed to pass on in full to customers more than $2.5 billion in savings created by Australia's MedTech industry since 2017.

"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," Mr Burgess said.

"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, notcorporate health insurers' profits, are put first."