Labor sticking with premium cap proposal

Latest News

Labor is standing firm on its plan to impose a two percent cap on premium increases for two years in the face of speculation smaller health funds might be exempted from the measure.

Private health insurers have consistently warned against the impact of the proposal.

According to Private Healthcare Australia CEO, Dr Rachel David, "An enforced premium pathway will immediately put at risk a number of small, employee-based and regional mutual health funds who are already close to breaching prudential reserves.

"These health funds have been serving their local communities for decades and this election-focused policy will directly threaten their future and competition in the sector. With this level of interference bankruptcies will occur. Further, the Opposition Leader should explain how Labor intends to override APRA’s strict prudential requirements."

Speculation has emerged in recent weeks that smaller not-for-profit health funds might be exempted from the measure, on the basis it could undermine their financial viability, but Labor has pointedly rejected the suggestion.

“We do not accept that any insurer will be put at risk by our policy,” shadow health minister Catherine King told The Australian.

In a speech in March to representatives of the Members Health Fund Alliance, Mr King did accept the proposed cap could force some insurers to spend into the capital reserves held above and beyond their prudential requirements. She said a Labor government would work with the prudential regulator to ensure the strength of the sector.