Annual report confirms jump in health fund benefit outlays

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Private Healthcare Australia says the prudential regulator's annual report on the operation of health funds has found insurers returned 88 per cent of premium revenue to members.

APRA's 2019-20 Operations of Private Health Insurers Annual Report shows the average claims ratio increased from 86 per cent in 2018-19 to 88 per cent.

"For every premium dollar, health funds have on average returned 88 cents to consumers in the form of healthcare benefits payments or claims reimbursements," said Private Healthcare Australia

CEO Dr Rachel David said the increase in the average claims ratio confirmed the private health insurance industry has not been immune to the impact of the COVID-19 pandemic.

The net margin of health funds fell to a low of 2.7 per cent in the past year. This was down from 4.9 per cent. In addition, while premium revenue rose 1.4 per cent, benefits by health funds increased by 3.8 per cent - from $20.9 billion to $21.7 billion, including $1.4 billion in claims liability deferred due to the pandemic.

“Australian health funds were quick to respond to the needs of members during the COVID-19 pandemic," said Dr David.

"Funds have already returned over $500 million to members, including more than $150 million in hardship provisions for members;  through postponing the April 1 premium increase for six months, some funds cancelled the increase altogether or have decided to provide further targeted relief for members on Jobkeeper and Jobseeker. Others are providing members with cash backs and rolling over of services to the next calendar year.

“APRA’s annual data shows the impact COVID-19 has had on savings were modest and, in fact, health funds have either returned any savings to consumers already or are using them to fund the backlog of elective surgery. Surgeries were postponed, not cancelled and APRA made it clear that health funds must retain enough capital to fund the backlog of elective surgeries, a program which is now well underway in all States and Territories," she added.