Labor's proposed 2 per cent cap on premium increases for two years "will be challenging" given the cost of healthcare is rising by 4.5 per cent above inflation each year, according to Medibank CEO Craig Drummond.
Mr Drummond, who was speaking at the company's annual general meeting, said while Medibank appreciates Labor's ambition "capping premiums will not change these costs".
"Both major political parties acknowledge that the current industry cost structure is not sustainable," he said, adding that "substantive change in affordability" is only possible through reform.
"Medibank and others in the health industry have been working with the Federal Government to reduce costs and simplify the health system. As a result, we’ve seen more reform in the last 12 months than in the past 18 years. And it’s delivering for our customers.
"This year Medibank passed on our lowest premium increase in 17 years, as a result of the work done to save our customers $50 million through prostheses reform."
He continued, "Additional reform to prostheses pricing, greater transparency in fees, more affordable care pathways and reducing low value or inappropriate care are critical to promoting sustainability in the sector and we look forward to working with the Government to make further progress on these issues."
He said the company had recorded a substantial turnaround in customer retention in the past year and grown market share over the past six months for the first time in a decade.
"As a business we had been losing market share for a decade, with too many complaints, and we knew that the relentless cost increases within the health system was the key concern for our customers. Today I am pleased to report that we have stabilised our market share, 18 months ahead of our initial milestone. The most recent APRA data shows that we grew our market share by 5 basis points in the second half of the financial year.
"Our customer complaint numbers are now well below our market share, and have been for more than 15 months."
The company reported group net profit after tax for the year of $445.1 million, down 1 per cent due to a decrease in net investment income. Health insurance operating profit increased to $535.6 million, up from $497.5 million in 2017, which the company attributed to growth in policy numbers, a softer claims environment, and benefits from its productivity program that saw management expenses decline by $11.2 million.
At its annual general meeting, Ramsay chief executive Craig McNally urged Labor to expand its 'cost' focus beyond private health insurance, particularly when it comes to the proposed Productivity Commission review of the sector.
“If you just look at health insurance premiums and think that the rate of growth of premiums is indicative of what is happening across the system, you are missing the point. The whole health system is growing at a much faster rate than what health insurance premiums are growing, so there are more fundamental things to look at.”