Growth in benefit outlays continues to rise faster than premium revenue, according to the latest quarterly statistics from the Australian Prudential Regulation Authority (APRA).
The statistics, which cover the September quarter, showed premium revenue rose 1.46 per cent to $6.2 billion. At the same time, benefit outlays rose 1.82 per cent to $5.6 billion.
APRA also reported what it called a "deterioration in insurance performance during the September quarter 2020 as gross margins fell to 9.9 per cent while net margins improved to 0.8 per cent, helped by a seasonal industry-wide reduction in management expense."
It added, "Investment income continued to be volatile, falling 58.5 per cent over the quarter to $99.3 million, with this being the main driver of the decline in quarterly industry profits."
Private Healthcare Australia said the report reinforces its position on the need to restore the private health insurance (PHI) rebate to 30 per cent.
CEO Dr Rachel David said there is a risk the benefits being paid by health funds will overtake premium income at the current trajectory.
"The only alternative is to aggressively drive structural reform that will drive down wasteful costs," she said.
“Almost half of the 13.74 million Australians with PHI have disposable incomes under $50,000. Restoring the rebate to 30% for low- and middle-income Australians will make premiums more affordable for people who are paying for the cost of their own healthcare, as well as reducing pressure on our public hospitals,” said Dr David.
“Without restoring the rebate, Australian governments will need to spend billions more of taxpayers’ money to clear the backlog of elective surgery and provide essential medical care in public hospitals, because they will be paying the full cost of treatment,” continued Dr David.
Members Health, which represents many small member-owned health funds, said the latest APRA statistics show more Australians have turned to PHI during the COVID-19 pandemic.
In the September quarter, the number of Australians with private hospital cover rose by 104,106, or by 0.3 percentage points compared to the previous quarter.
The largest increase in hospital treatment coverage during the quarter was 11,760 for people aged between 35 and 39.
“During a global pandemic, what could be more important than knowing you and your family are protected and will get the fastest available access to high-quality care with doctor of choice?” asked CEO Mathew Koce.
“The benefit and need for the private system has never been more apparent, especially given growing alarm at public hospital waits, which have blown out to well beyond a year.”
Dr David added, "Organisations like the Australia Institute which predicted huge windfall profits for health funds as a result of the pandemic have been proven seriously wrong. Health fund Industry profits have halved in just one year, and at a net margin of 2.14% are the lowest in 16 years. No industry is immune from the headwinds of the COVID-19 pandemic.
“There are many calls on the public purse, but helping struggling individuals and families who are prepared to pay something towards their own health care is not only good for those families but good public policy that will ensure our health system remains world class and sustainable – both public and private,” said Dr David.