Health insurance premium increase should support private hospitals, not profits

THE onus is now squarely on the health insurance companies to ensure the ongoing viability of Australia's private hospitals following today's premium increase announcement says Australian Private Hospitals Association (APHA) CEO Michael Roff.

Minister for Health and Aged Care Mark Butler has released an average 3.03 percent increase in health insurance premiums from April 2024.

Mr Roff said private hospitals need help.

"After suffering losses through COVID-19 enforced elective surgery restrictions, private hospital activity is not where we would expect, especially given there are now more than 850,000 additional Australians with hospital cover than prior to the pandemic.

"On top of this, health insurance payments have not kept pace with unavoidable cost increases experienced by hospitals. Private hospitals have reported growing workforce costs, along with higher than six percent increases on those cost-of-living factors all Australians are familiar with – power, food and fuel.

"As a result, we have seen a rising number of private hospitals close, while others have stopped providing loss-making services like maternity care."

Mr Roff said data from the Australian Bureau of Statistics data shows only 30 percent of businesses in the private hospital sector reporting a profit or just breaking even in 2021-22. This is down from 89 percent in 2019-20 and the situation has deteriorated further in the last 12 months.

In contrast, health insurers are experiencing record profitability and clearly have the capacity to come the aid of hospitals. Last financial year, the private health insurance industry made a collective profit of more than $2 billion, up from a $1 billion profit the previous year.

"Unfortunately, we will continue to see private hospitals close or reduce services unless health insurance companies put sustainability of the private health sector before their own profits.

"Private hospital success is in everyone's interests. Without private hospitals, health insurance companies don't have a product to sell. Every time a private hospital closes, the burden on struggling public hospitals increases, as do waiting lists. This also throws more burden on taxpayers to fund health services.

"Australia's private hospitals provide high quality services to more than four million patients each year and there is no way the public system could cope with a significant influx of demand."

Mr Roff said the private hospital sector is experiencing the most challenging period in living memory.

"If health insurance companies continue to refuse to meet cost increases experienced by hospitals it will ultimately be self-defeating. As capacity in the sector continues to diminish, we are likely to see the emergence of waiting lists for treatment in private hospitals. Fast access to hospital care and avoiding waiting lists is one of the key selling points of private health insurance.

"If private health insurers want to have a product to sell, they need to up their game and pay for the services private hospitals provide," Mr Roff said.

-ENDS-

Next Media Centre:
12/4/2024 Program helping Australians manage post-cancer life wins award

Previous Media Centre:
28/2/2024 Private hospitals still struggling, despite health insurance membership increase