Medibank returns almost $1bn as Australians steer clear of hospitals, fuelling more ‘pandemic savings’.

Australians are still shying away from elective surgery and extras like optical and dental as Medibank lifts the amount of “pandemic savings” it is returning to customers to almost $1bn in total.

Medibank customer portfolios boss, Milosh Milisavljevic, says despite pandemic restrictions on elective surgery and extras treatments easing, claims remained “below normal levels”.

Australians are still shying away from elective surgery and extras like optical and dental procedures Medibank says as it lifts the amount of “pandemic savings” it is returning to its customers to almost $1bn

Medibank, Australia’s biggest health insurer, said on Thursday that it would return an extra $207m to policyholders over the next six months — extending its Covid-19 “giveback” to $950m.

It caps off a torrid three months for Medibank and its customers after cyber attackers stole the health records and other personal information of more than 9 million policyholders.

Medibank customer portfolios boss, Milosh Milisavljevic, said customers would receive up to $151 for extras only policies, while those with combined hospitals and extra cover would get up to $667

“On average this will be $30 for extras only policies and around $129 for hospital and extras policies,” Mr Milisavljevic said.

“Customers will receive their cash by late May 2023 – this will occur automatically; customers do not need to do anything.”

Mr Milisavljevic said Medibank was funding the give back from additional Covid-19 permanent net claims savings and will not impact the company’s operating earnings for the six months ending December 31, 2022.

He said despite pandemic restrictions on elective surgery and extras treatments easing, claims remained “below normal levels”.

Medibank’s Milosh Milisavljevic.

This underscores the challenge hospitals and other health services face as they seek to rebuild their balance sheets, after hundreds of millions of dollars were wiped off their bottom lines during the pandemic.

Complicating matters further, health costs have soared while the labour market for nurses and other health professionals remain tight, setting the scene for a talent war.

Craig McNally — chief executive of Australia’s biggest private hospital provider, ASX-listed Ramsay Healthcare — said last month the company was “still a long way to get back to pre-Covid margins” as its lenders lifted the group’s leverage ratio to the “maximum allowable”.

The pandemic and labour shortages have battered Ramsay – with Covid-19 costs totalling $64.4m in the three months to September 30. The company is now exploring the sale of some of its hospitals, with Mr McNally predicting “more normalised conditions” will not return until 2024.

This compares with health funds generating $2.25bn in “pandemic savings” – or claims that will not materialise as a result of Covid-19. While the sector has so far returned more than $2.2bn of those savings to customers, it has attracted criticism.

Healthscope, Australia’s second biggest private hospital operator, accused HCF of not being “equally as willing” to fund care after the insurer returned $130m to members as part of its commitment to hand back savings made during the Covid-19 pandemic.

It came as Healthscope terminated its funding contract with HCF after negotiations failed between the pair — a move that will force HCF members to pay an extra $1000 in out-of-pocket fees on average if they are treated at a Healthscope hospital from January 31.

HCF bridled at the criticism over it returning cash to members, saying Healthscope was asking it to pay for services it did not provide HCF members during a time when access to treatment was restricted.

The Australian Competition and Consumer Commission has warned health funds not to bank their pandemic savings. For Medibank the decision to return cash to members was simple.

“Our commitment has been to ensure that we would not profit from the pandemic and to return any Covid- 19 permanent net claims savings to our customers, because it is the right thing to do,” Mr Milisavljevic said.

“Our Covid-19 support package and give back program has now reached a record $950m.

“We know a lot of people are doing it tough at the moment with rising cost of living expenses, so we hope that this provides our customers with some financial relief.”