Quarterly update confirms membership growth and ongoing impact of pandemic

Latest News

The latest quarterly update from the Australian Prudential Regulation Authority (APRA) has confirmed another quarter of growth in private health insurance membership and the ongoing impact of the COVID-19 pandemic.

The data for the three months to the end of December 2021 shows hospital treatment membership increased by 228,506 people during the year.

It also shows premium revenue rose 5.8 per cent to $26.4 billion. Claims were down 1.2 per cent to $21.9 billion.

"Claims growth fell due to various COVID-19 restrictions imposed across Australia throughout the year as well as being impacted by movements in insurers’ Deferred Claims Liabilities (DCL)," said APRA.

The prudential regulator said, "In the year to 31 December 2021, the industry reported a profit of $1.8 billion, an improvement from the $558.8 million reported in the preceding year. The increase in profitability in the year to December 2021 was driven by recovery in insurance profits and investment income following the weak margins and investment returns during the height of the pandemic in 2020."

Private Healthcare Australia said the latest statistical update confirmed continued growth in policyholders but also the need for reform.

“Improving affordability and access to private health insurance is the key addressing the current hospital crisis and ensuring Australians can access the healthcare they need," said CEO Dr Rachel David.

“Private health insurance is the most effective way to clear the backlog of surgery and take pressure off the public hospital system. It’s now more critical than ever that the government implement promised reforms to improve affordability and keep pressure off premiums."

Dr David called on the federal government to recommit to its budgeted reform of medical device pricing and for the restoration of the private health insurance rebate for many Australian families.

“The 2021 Federal Budget included a commitment to start slowly reducing the cost of overpriced of medical devices in Australia, saving consumers tens of millions of dollars and reducing cost of living pressures on families. This promise should be implemented now, before demand for essential non-emergency surgery starts to escalate again.

“With cost of living now a major issue for most Australians, it is time for the Government to restore the PHI rebate to 30 per cent (it is currently less than 25 per cent) for low and middle-income families," said Dr David.

However, the medical device sector hit back, saying the data shows the pandemic has delivered higher profitability and management expenses for insurers.

Medical Technology Association of Australia CEO Ian Burgess said, “Insurers have continued to benefit from reductions in medical device pricing, with average benefits paid for devices falling 15% over the last five years. The truth is insurers spend more on themselves and management fees than they do for life-saving medical technologies for patients.”

The Australian Private Hospitals Association (APHA) said APRA's quarterly update suggests 11,000 anticipated admissions were missing from private hospitals in the last quarter of 2021.

Acting CEO Lucy Cheetham said the missing surgeries will take some time to work through.

“It is important to note that these numbers only include the very beginning of the Omicron wave in Australia and not elective surgery restrictions in place on the east coast until last month.

“It has been almost two years now of on/off elective surgery restrictions for private hospitals and the health system, that adds up to significant wait times for patients as surgery returns.

“Elective surgery, while not life-threatening, is still necessary. It includes surgery like knee and hip replacements or cataract surgery. Making people wait for these surgeries means Australians are left managing pain, low quality of life and even difficulty seeing.”

Ms Cheetham said private hospitals will be working hard to address this backlog as quickly as possible.

“Just as when the pandemic hit and private hospitals stepped up to the mark to be part of the fight against COVID-19, the private sector will again help to ensure Australians get access to the care they need.”