Private Healthcare Australia says it will be challenging to meet the federal government's goal on annual premium increases as health minister Greg Hunt pushes a new round of reforms.
Chief executive Dr Rachel David said the sector understood concerns over affordability but that the cost of claims is rising faster than premium revenue.
Quarterly statistics recently released by the Australian Prudential Regulation Authority confirmed private health insurers increased benefit outlays over the past year by 3.65 per cent while premium revenue rose 2.62 per cent.
Dr David was responding to reports health minister Greg Hunt has demanded insurers resubmit applications after they requested average increases of 3.5 per cent.
An average increase of 3.5 per cent would be higher than this year's (3.25 per cent) but lower than last year (3.95 per cent) and one of the lowest this century.
According to Dr David, "Health funds will do all they can to meet the government’s target but it will be challenging, and mean that health funds will have to be tough on wasteful medical device claims and there will be no room to move in contracts with providers."
Health minister Greg Hunt has also declared the federal government's intention to pursue a new round of reforms, including allowing private health insurers to cover specialist medical care outside the hospital setting.
Mr Hunt told The Sydney Morning Herald and The Age the current system that restricts insurers to covering care delivered in hospital creates "perverse outcomes and perverse incentives".
"The hospital-in-the-home revolution is potentially one of the most significant improvements in the private health offering in the last 20 years," he said.