The private health insurance quarterly statistics from APRA confirm the industry delivered record benefits to its members while maintaining around the same level of profitability it has for the past decade.
“Health fund profits margins were 5.16% in the 12 months to December 2017 and health fund profits have remained stable over the last decade running between 4.5 and 6%, significantly below the returns made by private hospital groups and medical specialist practices,” said Private Healthcare Australia CEO, Dr Rachel David.
“This report by PHI industry regulator APRA should leave no doubt that there is no pot of gold hidden in health funds, and put an end to misleading statements that 'some of the biggest health insurance providers pocket a return of over 20 per cent',” she added.
In terms of benefits, the new report shows funds returned $20 billion to members in the 12 months to December 2017, was an increase of 4.15 per cent on the previous 12 months.
This included higher benefits for hospitals, medical devices, dental treatment and medical specialists.
“Health funds are consistently paying out the highest percentage of the premium back to customers of all insurance types – an average of 86c in the dollar (it has been above 85% for 15 years). This compares with 67c for property insurance and 64c for general insurance," continued Dr David.
“Health funds are committed to keeping private health insurance premiums affordable for members. There is only one reason premiums increase and that is because health funds are paying for more healthcare.
"The key driver of premium growth is increases in input costs such as the cost of medical devices, hospital accommodation, and provider fees charged by medical specialists and allied health providers.
“Public hospitals have just been guaranteed a 6.5% funding increase through the COAG process while in contrast this year’s average increase for PHI is 3.95%. This is necessary to ensure health funds remain financially viable, meet statutory prudential requirements and, most importantly, continue to provide members with access to quality health care, as the population ages and people use health services more frequently,” added Dr David.