Medibank: System-wide risks of premium cap

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Labor's commitment to apply a two-year two percent cap on annual private health insurance premium increases will lead to ambulances being "stacked up" outside hospital emergency rooms, according to Medibank.

CEO Craig Drummond told The Australian the proposed cap means growth in benefit outalys will have to be capped at around the same level.

“We want premiums as low as possible to increase participation and take pressure off the public system,” said Mr Drummond.

The industry has also said any policy move that inhibits the ability of insurers to manage growth in benefit outlays will simply delay premium increases. Industry-level data published by the Australian Prudential Regulation Authority shows the vast majority of premium increases is spent in benefit outlays.

Dr Andrew Wilson, Medibank’s group executive of healthcare and strategy, also told The Australian policy-makers need to look at the health system holistically.

“You have to be careful when you start tampering with one part of that system. It concerns me we may end up in a period of instability and back to the days where we saw ambulances routinely stacked up outside emergency departments,” he said.