Coronavirus: Cash back for health fund members from COVID-19
Private health fund members could be in line for hundreds of dollars in cash payments or premium reductions as insurers hand back windfall profits from COVID-19.
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Exclusive: Health fund members could be in line for hundreds of dollars in cash payments or premium reductions from their health fund as insurers hand back windfall profits from COVID-19.
Major health funds will in the next few weeks reveal how they will hand back to their members billions of dollars they will save as a result of COVID-19 surgery and dental bans.
Members could be in for substantial rebates, premium reductions or have their health cover extended for free under various options being considered by the funds.
Private Healthcare Australia chief Dr Rachel David has pledged no health fund will make supernormal profits as a result of the ban on non-urgent surgery and net margins will stay at around 5 per cent.
“We absolutely guarantee we will the pay money back, we’re not going to make a profit out of COVID,” she said.
However, each health fund will come up with its own method of handing back the savings and they must negotiate with federal government regulators to get special permission to deliver the money back to members.
Health funds have calculated around two thirds of the elective surgery they normally pay for will be cancelled as a result of bans on non-urgent surgery imposed by governments to free up hospital beds for COVID-19 patients.
Over a six-month period funds generally spend around $8 billion on rebates for hospital care so that means savings of around $5 billion.
They spend another $2.7 billion on extras rebates for dental, physiotherapy which has also been cut back as a result of COVID-19 social distancing policies.
Health funds have already announced they will delay this year’s scheduled premium rise for 6-12 months and offered premium relief for people who lose their jobs and many have extended cover to all patients who need COVID-19 treatment even if they have Silver and Bronze level cover.
Medibank has already pledged it is “committed to ensuring that our customers benefit from unforeseen financial gains in light of the Australian Government’s cancellation of non-urgent elective surgery in private hospitals to free up critical health resources”.
Bupa told News Corp it “is committed to transparency, and our guarantee is that we’ll act in the interests of our customers and not seek to benefit from this unprecedented situation. We are looking at the best way to do this”.
HCF’s chef Sheena Jack said her fund was not for profit and ‘We will not be keeping any windfall gains”.
“We are exploring how we help members now as well as how we can pass back any savings to them that accrue from reductions in claims due to COVID-19,” she said.
Nib said it anticipates large reductions in health care treatment and net claims expense as a short term consequence of COVID-19.
“How members might be additionally compensated for the expected reduction in treatment or generally supported is an issue we are currently examining,” Nib general Manager Mark Fitzgibbon said.
“Options include expanding coverage and premium rebates. However, anticipated savings are only just starting to materialise, the quantum is at this stage impossible to predict and there will inevitably be lost premium revenue as well given tough economic conditions,” he said.
The Australia Institute has calculated Health funds will reap $3.5-$5.5 billion in savings over the next six months as a result of the surgery and other bans.
This was equivalent to each health fund policy holder paying $500-$750 for health cover they can’t use and their premiums should be slashed from next month, the institute said.
Researcher Rod Campbell said health funds should have to pass these savings on to their members almost immediately in the form of reduced premiums.
A preliminary review should be conducted within two weeks and funds should be directed to adopt the new lower premiums as of 1 May. He said.
“The Productivity Commission, in conjunction with the Australian Prudential Regulation Agency, should establish a real time monitoring system so that the appropriateness of the health insurance premiums can be monitored on a monthly basis,” he said.
Originally published as Coronavirus: Cash back for health fund members from COVID-19