Correspondence sheds light on 2018 premium process

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Information released by the Department of Health has shed light on the process leading to this year's annual increase in private health insurance premiums.

The information, which has been released following a freedom of information request, is of correspondence between leading Perth-based health insurer HBF and the Department of Health.

The correspondence relates to the insurer's 2018 premium increase submission and hospital product changes.

It reveals HBF's original submission, dated 10 November 2017, sought an average premium increase of 3.9 per cent. The insurer said the proposed increase reflected a number of savings including $17 million from reductions in the price of prostheses.

Health insurers agreed to pass on reductions in the price of prostheses, which were negotiated as part of a strategic agreement between the government and Medical Technology Association of Australia, as part of their 2018 premium increase submissions.

The documents reveal health minister Greg Hunt wrote to health insurers, including HBF, on 4 December 2017 to request they resubmit their premium submission to ensure "it is the lowest possible increase."

In response, the Board of HBF met on 12 December and agreed to resubmit its premium submission application with a reduced request of 3.75 per cent.

On product changes, the correspondence reveals an exchange between HBF and a Department of Health official following a media report on 6 March.

The ABC report suggested HBF would no longer cover psychiatric services for basic or mid-tier hospital policies.

However, HBF clarified that the report was incorrect and that it was not a removal of benefit but that basic or mid-tier hospital policies will now be limited to minimum default benefits for psychiatric care.

According to the insurer, "These changes were referred to in HBF's 2018 Premium Rate submission and re-submission," adding communication on the changes has been shared in advance with the Private Health Insurance Ombudsman and the ACCC.