The massive profit health funds made from Covid

They gained hundreds of thousands more members and paid out nearly $1 billion less in benefits to them, health funds were one of the few parts of the health system to profit from the pandemic.

HEALTH fund profits have almost doubled to $2 billion as Covid surgery bans slashed the number of operations taking place in private hospitals.

Insurers paid out $700 million less for hospital treatments in the year to March 30 and $247 milion less for extras like dental and optical, the latest government data shows.

At the same time, their premium income surged by $1.4 billion as they took on new members who were trying to avoid lengthening queues for surgery in overstretched public hospitals.

Insurers promised not to profit from Covid and, since the pandemic began in 2020, they have returned some of the savings via lower premium rises, cashback payments and delayed premium payments to those in financial hardship.

Health insurers profited from Covid. Picture: NCA NewsWire/Paul Jeffers

However, the consumer watchdog, the Australian Competition and Consumer Commission (ACCC), has criticised them for being tardy in returning the full amount of the profits they made.

“We expect insurers to return all benefits from procedures that were not performed and are not expected to be performed later. This may be particularly applicable to extras treatment and geographic areas that were subject to extended lockdowns,” ACCC Deputy Chair Delia Rickard said.

“We will continue to monitor the actions of insurers to return all profits made due to Covid 19 to policy holders as they promised and report on it in our next annual report on the private health insurance industry,” Ms Rickard said.

The Australian Private Hospitals Association chief Michael Roff said, since the start of the pandemic, more than 390,000 anticipated admissions expected in private hospitals did not occur.

“Over 100,000 of these ‘missing episodes’ were added in the first three months of 2022 alone, further increasing elective surgery wait times,” he said.

Health fund membership had been in decline before Covid but since the pandemic began it has been slowly increasing.

The bad news is the largest increases have been among elderly people, with the 50-plus age groups increasing by 114,384 compared to only 64,634 younger people (age 20-49) joining.

Older people are more likely to claim on their insurance cover and this drives up premiums.

Surgery delays during Covid helped insurers’ profits rise. Picture: Supplied

Private Health Insurance Australia chief executive Dr Rachel David called on the new Labor Government to move quickly to introduce reforms to help lower health fund premiums.

“The Albanese Government should scrap the secret deal former Health Minister Greg Hunt made in the last days of government, which transfers $250-$400 million from the pockets of health fund members’ to big multinational device companies,” she said.

“There will be significant savings for consumers and for government by resetting prices for medical devices in line with the market — over $500 million per annum, equating to a two per cent reduction in premiums in the next round,” she said.

While it was encouraging to see more people taking out health cover Mr Roff warned health fund members may find it hard to get care in private hospitals because of a major workforce shortage.

“In addition to increased staff absenteeism due to Covid, private hospitals have told us they currently have a shortfall of 5500 nurses and they urgently need at least 1000 skilled migrant nurses,” he said.

“The incoming Federal Government’s first task should be addressing the health workforce crisis in Australia by making this country an attractive option to skilled migrants.”

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