A significant week for the private health sector with the prudential regulator set to introduce new standards for insurers and the Grattan Insitute calling for major changes to community rating.
The Australian Prudential Regulation Authority (APRA) will release a discussion paper proposing to increase the minimum level of capital private health insurers need to maintain. The regulator may also change how insurers are required to maintain this capital.
The release of the discussion paper comes after APRA executive board member, Geoff Summerhayes, appeared before a House of Representatives standing committee.
Mr Summerhayes, who has previously urged the sector to address the risks associated with affordability, said some are changing business models while others are "looking for others to solve the problem.”
“There are certainly some good examples of where firms are changing their business models, lowering their structures, and looking at innovating ways of providing their care,” he said.
“But if we are to live in an environment where the premiums are set by the government of the day and those premium (increases) are at half of what the costs are, and then we have the utilisation feature increasing as well — that is going to put pressure on the sector.”
Mr Summerhayes' comments come as the Grattan Institute is expected to release a new report in which it will call for changes to community rating.
It recommends the removal of community rating for people aged under 55 as a mechanism to attract more younger people into private health insurance.
The impact on over premiums for those aged over 55 remains unclear.