New APRA data triggers dispute over device outlays

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The rise in benefit outlays by private health funds topped the increase in premium revenue in the financial year 2019 but the number of insured Australians dropped by around 30,000.

According to the latest statistics from the Australian Prudential Regulation Authority, benefit outlays rose 2.99 per cent over the year to $20.89 billion, while premium revenue increase 2.77 per cent to $24.56 billion. 

The industry's 'net margin' remained stable at 4.89 per cent.

"The largest decrease in coverage during the quarter was 7,804 for people aged between 20 and 24. The largest net decrease (taking into account movement between age groups) was also for the same age group, with a drop of 14,271 people," says the APRA report.

The number of privately insured hospital episodes rose slightly over the year from 4.66 million in 2018 to 4.67 million. Benefits paid for hospital treatment also rose, from $15 billion to $15.4 billion.

The average out-of-pocket cost per hospital treatment episode rose 1.9 per cent from $308 to $314.

Speaking on Sydney radio 2GB, the chief executive of Private Healthcare Australia, Dr Rachel David, "But taking a step back, some of the data that the Government and the regulators released yesterday, showed that health funds are actually paying record benefits this year on behalf of consumers, more than ever before. And - so that if people are in health insurance, like yourself for the long haul, they will actually get value for money and benefit from it, you know, once they actually claim.

"Because the cost of being in hospital, are far higher than people realise and if they do want to go to a private hospital and get their surgery when they want it, from a doctor that they've chosen who will provide - who's fully trained and will provide them with continuity of care, it really is worth the trouble."

Release of the statistics triggered a renewed argument between private health insurers and medical device companies.

Dr David said one "disappointing" aspect of the new APRA data was in relation to prostheses. She accused medical device companies of mitigating the impact of price reductions negotiated as part of a strategic agreement with higher volumes.

"The savings promised as a result of the MTAA agreement have not eventuated. Consumers were promised savings from medical devices of at least $250m over the last 12 months to put downward pressure on premiums. However, as the MTAA [Medical Technology Association of Australia] stated in its own media release, savings have totalled a mere $13m," she said.

The MTAA disputed the characterisation of the data, contrasting an 8.6 per cent increase in volume with an 8.5 per cent fall in average benefit level.

The "insurers have paid a total of $13 million less for medical devices over the last financial year," said CEO Ian Burgess.