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02 Mar 2015

Private health insurance will cost families about an extra $200 a year after Health Minister Sussan Ley approved an average 6.18 per cent premium hike by insurers.

The premium increase, first reported in the 16 February edition of Australian Medicine, is due to come into effect on 1 April, and will see some families hit with an extra $280 in annual insurance costs.

Ms Ley said that as insurance payouts increased, rising premiums was an ongoing challenge faced by successive governments.

“Over 13 million Australians now have some form of private health insurance, and it’s therefore essential for the health of our nation that we continue to maintain a strong and competitive market,” the Minister said. “To achieve that, we must ensure any premium increases strike the right balance between keeping them affordable for consumers without putting the financial viability of the sector at risk.”

Figures compiled by the Private Health Insurance Administration Council show that insurer hospital benefit payouts increased 8.1 per cent in the 12 months to June last year, overshadowing a 7.5 per cent increase in premium revenue over the same period.

But growth in many expenses is slowing. Hospital benefits grew by just 6.9 per cent in 2012-13, a sharp drop from a 9.3 per cent increase the previous year, and the average payout per hospital episode was $2041, up just 4.6 per cent.

The average benefit paid for medical services was $58, the same as the previous year.

Despite this, insurers complain they are being squeezed by rising payouts and uninspiring membership growth.

Newly-privatised Medibank Private last month reported a half-year net profit of $151.2 million, and is on track for a full-year profit of $258 million, but intends to increase its premiums by 6.59 per cent next month to improve revenue, while rival nib, which posted a net half-year profit of $41.4 million, has announced a 6.55 per cent premium hike.

In addition to raising premiums, insurers have also flagged they intend to continue with an aggressive and controversial push to intervene in the delivery of health care.

Nib Managing Director Mark Fitzgibbon told the Adelaide Advertiser there were 800,000 avoidable hospital admissions last year, and said the fund was working with GPs on ways to treat patients, including those with chronic disease, in primary care settings rather than admitting them to hospital.

Medibank Private has also piloted a program to give members preferential access to GPs, intends to drive a harder bargain with hospitals to lower their charges and is seeking approval for a scheme to provide primary health care cover.

AMA President Associate Professor Brian Owler has expressed alarm about the increasing intrusion of private health funds into the provision of care, warning that they are in danger of encroaching on the doctor-patient relationship and leading the country down the path of US-style managed care.

Shadow Health Minister Catherine King accused the Government of showing a “complete lack of concern” for families by approving the premium increases – which she noted were the second-highest in a decade and well above the inflation rate.

But Ms Ley advised that, with 30 health funds to choose from, consumers should “shop around to get the best deal”.


Adrian Rollins

Published: 02 Mar 2015