Health fight gets ugly: Private health insurers, NSW government brawl over hospital funding

The Minns Government and private health insurers have escalated their fight over hospital funding into an all-out brawl, while the NSW Treasurer admits Mike Baird got it right 10 years go.

The dispute between private health insurers and the Minns government over hospital funding has descended into an all-out brawl, with Treasurer Daniel Mookhey preparing to increase taxes on insurers if they do not cough up more cash.

Private health insurers will soon be required to cover the full cost of public hospital beds used by their patients under new legislation being reintroduced by the state government. The law, which was initially passed but later scrapped by the Coalition over a decade ago, is aimed at holding the major four private health insurers accountable.

At the same time, insurers have launched a marginal electorate assault on the state government in a bid to stop the secret “health tax” which the industry says would increase premiums by $114 per year and force customers to drop cover.

Labor on Tuesday will reintroduce legislation passed by former Treasurer Mike Baird in 2013 allowing the government to hike the private insurer levy.

The NSW government and private health insurers are at odds. Picture:NewsWire/ Monique Harmer

Treasurer Daniel Mookhey explained the move targets these companies, noting that since they stopped covering bed fees, their profits have more than doubled.

“Meanwhile, the amount they return to members in benefits has dropped to just 82 cents for every dollar,” he told 2GB’s Ben Fordham on Tuesday.

The move is in a bid to wedge insurers into paying the NSW government’s preferred “room rate” for private patients to get a single room in a public hospital.

Insurers are refusing to pay the almost $900-per-day rate, which is about double the Commonwealth standard.

The Telegraph first revealed last month that bureaucrats were threatening to hike taxes on private health companies if they refuse to pay the higher rate.

Private Healthcare Australia has now launched a social media advertising campaign targeting marginal electorates with high rates of health insurance membership.

The industry has argued that it will be forced to pass on any tax increases to members.

The ads will warn that hiking the private insurance levy will increase premiums by more than $100 a year, putting more strain on the public system as people are forced to drop their cover.

In contrast, Mookhey has also accused private insurers of refusing to pay their way.

Treasurer Daniel Mookhey said Mike Baird got it right 10 years ago. Picture: Newswire / Gaye Gerard

The issue is a repeat of an argument in 2013 when the then-Coalition government under threatened to increase taxes on insurers if they did not pay a larger “room rate” for private patients to get a single room.

The insurers eventually gave in Mr Baird’s demands.

“Mike Baird was right 10 years ago when he demanded the insurers pay their fair share, and we are right to enforce that agreement now,” he said.

“It is unfortunate that it has come to this – but the insurers can resolve the impasse by paying their bills.”

About one in five public hospital beds are taken up by people with private health insurance.

Private Healthcare Australia chief executive Rachel David has previously accused the Minns government of moving to impose a “two-tiered” system of hospital cover by slugging private health customers more.

Originally published as Health fight gets ugly: Private health insurers, NSW government brawl over hospital funding