Private health funds with highest admin fees in Australia

Spiralling private health fund management fees are eating into Aussies’ benefits and services. One of the big four charges more than $400 a year – see how much you are paying.

Health fund members are being slugged with soaring health fund management fees worth an average of almost $400 per policy.

That money, which pushes up premiums, is being spent on bureaucracy rather than on benefits for hospital and extras services.

And as the government prepares to approve next year’s premium rises, health policy experts are calling on Health Minister Mark Butler to take a much tougher approach to funds with bloated bureaucracies and high earning executives.

“The Minister should really examine how much of the premiums go back to members in benefit payments and how much gets siphoned off in management fees,” former Health Department Chief and health economist Professor Stephen Duckett said.

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Health policy analyst Martyn Goddard. Picture: Chris Kidd

Former Health Department chief Professor Stephen Duckett. Picture: Supplied

“And for those funds with high management fees and in higher premiums, he should tell them to sharpen their pencils and come back with a better proposal,” Mr Duckett said.

Cash-strapped homeowners struggling with rising mortgage repayments will feel some vindication in learning that the health fund with the highest management fees is the Reserve Bank Health Society.

Its management fees totalled more than $1000 per policy in 2021-2022.

Figures compiled by health fund regulator, the Australian Prudential Regulation Authority (APRA), show on average across the health insurance industry management fees are 9.9 per cent and grew from 9.5 per cent the year before.

Of the big four health funds HCF has the highest management charges worth $419 per policy or 10.3 per cent.

HCF charges a lot for admin. Picture: Supplied

Nib’s management fees are worth 10.7 per cent or $374 per policy.

Bupa’s administration costs are worth 9.8 per cent or $371 per policy.

The nation’s largest health fund Medibank has among the second lowest management fees worth 7.5 per cent or $262 per policy.

Nib also charges a lot for admin in its policies. Picture: Supplied

Health policy analyst Martyn Goddard said the proportion of premium income the health funds pay out in benefits has plummeted in recent years.

In 2021-2022 health funds received $26.58 billion in premium revenue but paid out only $21.83 billion in benefits.

Bupa also charges nearly $400 for admin. Picture: Supplied

Their surplus was worth 21.75 per cent of premium income up from 13.59 per cent in 2019-2020.

By contrast Medicare’s administration costs in 2022-2023 were just 3.4 per cent of the government income it received, he said.

Health fund premiums are meant to rise just once a year on April 1 but during the pandemic when hospitals faced surgery bans and health fund profits soared most funds delayed the rises multiple times, that process continued this year.

“The fact that funds have been able to delay premium increases suggests that what they asked for was not necessary, which suggests the department was not as careful in scrutinising the proposals as it should have been,” Professor Duckett said.