Private Healthcare Australia says time now for reform

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Many private health insurers will apply the deferred premium increase from today with Private Healthcare Australia urging further reform.

The annual premium increase, which was approved by health minister Greg Hunt, was deferred from the normal 1 April implementation in the early period of the COVID-19 pandemic.

The deferral coincided with the temporary shutdown of most elective surgery.

Most insurers will apply the increase from today but still provide a range of support for members experiencing hardship during the pandemic.

Private Healthcare Australia CEO Dr Rachel David called for prompt action on a number of issues with costs rising despite the pandemic and the related restrictions.

“Health funds don’t want to increase premiums by a single dollar but it is necessary to ensure they remain financially viable as health costs increase, and most importantly, continue to be in a position to provide members with access to quality and timely healthcare,” said Dr David.

“Many people do not realise the Federal Government, not health funds, determines what claims health insurers must pay, and therefore how much premiums need to rise.  This is why the private sector needs to work with the government to address outdated regulations which are driving wasteful care and forcing premiums up.

“This year’s postponed premium increase which comes into effect on 1 October is the lowest average increase in 19 years and is in proportion to health inflation, which has been unaffected by the COVID-19 pandemic.  

“Recent APRA data has revealed that health funds have not profited from COVID-19. In fact, the impact of the pandemic has seen the net margin of Australia’s health funds fall to a low of 2.8%. This compares with 4.9% in the twelve months to June 2019 and represents a 42% decline in profitability.

“Health funds have already returned over $500 million to members through postponing the April 1 premium increase for six months, some funds cancelled the increase altogether or have decided to provide further targeted relief for members on Jobkeeper and Jobseeker. Others are providing members with cash backs and rolling over of services to the next calendar year.

“The COVID-19 restrictions did not mean the treatment for other illnesses stops. Health funds continued to cover many procedures during the six week shut-down, including emergency surgeries, pregnancies and in-hospital mental health treatment. Health funds also fast-tracked members’ access to telehealth for physiotherapy, psychology and exercise physiology.”

Dr David said affordability is an issue across the health system but that private health insurance has never been so important given wait times in the public system can exceed 1.5 years for common elective procedures.

Private Healthcare Australia called for reform of medical device pricing and the removal of red tape to allow funds to cover out-of-hospital care on a broad scale.

"We saw how successful this was during the pandemic when people could be treated in their own home," said Dr David.