Health policy analyst Charles Maskell-Knight has taken a close look at claims being made by the private health insurance lobby group, Private Healthcare Australia, as the sector advocates for premium increases.
According to its website, Private Healthcare Australia represents 21 Australian health funds with a combined coverage of over 14.2 million Australians, or 98 percent of the sector on membership.
Charles Maskell-Knight writes:
Following the release of the 2022-23 Australian Prudential Regulation Authority (APRA) report on private health insurers, I wrote in mid-November that the financial health of the sector was so robust there was no case for the Minister to approve a premium increase.
I also argued that given high and increasing levels of reserves, now was the time for the not-for-profit insurers to implement their slogan of putting people before profits, and not apply for an increase.
Now I don’t know whether or not Minister Mark Mark Butler reads Croakey, but on 19 December the ABC reported that he had “told private health insurers to ‘have another go’ after rejecting their bid to lift premiums by up to six percent”.
Dr Rachel David, CEO of Private Healthcare Australia (PHA, the insurers’ lobby group), leapt into action and issued a media release seeking to justify a premium increase.
It was titled Health insurance premiums must rise to cover inflation and soaring use of hospital services.
Here is a table showing key metrics for the private health insurance sector for 2018-19 (pre COVID-19) and 2022-23.
It may be true, as Dr Rachel David claimed, that “many funds are still providing cash backs and deferred premiums for their members as part of their promise not to profit from lower claims during the pandemic”.
But the net assets held by the sector have still increased by $1.7 billion or just under 20 percent compared with the last pre-pandemic year.
And premium revenue growth since 2018-19 ($2.8 billion) has still outstripped benefits paid ($1.5 billion).
Insurers always identify the prices they are compelled to pay for prostheses as a factor driving premiums.
Total prostheses costs grew between 2018-19 and 2022-23 from $2.1 billion to $2.3 billion – an increase of just over $0.2 billion or 10 percent.
Over the same period, management expenses grew from $2.3 billion to $3.0 billion – an increase of over $0.7 billion or 32 percent.
On the basis of these figures, the PHA’s media release should have been titled Health insurance premiums must rise to cover soaring management costs and ensure reserves continue to increase.
Let’s hope Minister Butler continues to reject any application to increase premiums that is not required to avert insolvency of the insurer concerned.
• Charles Maskell-Knight PSM was a senior public servant in the Commonwealth Department of Health for over 25 years before retiring in 2021. He worked as a senior adviser to the Aged Care Royal Commission in 2019-20.
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The HCF cash backs are little more than trivial.