Health insurers sweat on premium reforms

Legislation for the Coalition’s long-promised health insurance reforms is already two months overdue.

Federal President of the AMA Dr Tony Bartone. Picture: Kym Smith

Legislation for the Coalition’s long-promised health insurance reforms — and new gold, silver, bronze and basic categories — is already two months overdue, adding to uncertainty in the sector ahead of the federal election.

The legislation was meant to have been passed in June but was slow to parliament and delayed further by last week’s political ­instability.

It now needs to be approved by the Senate in the next sitting week for the reforms to remain on track.

The timing is crucial, with health funds having to calculate premium increases for the coming year and make applications to the government by November for changes to take effect in April.

Health Minister Greg Hunt resigned last week to back unsuccessful Liberal leadership contender Peter Dutton but retained the confidence of new Prime Minister Scott Morrison and will be sworn back in today.

The reforms are considered crucial to achieving the Coalition’s target of premium increases below 4 per cent.

Labor’s plan for a 2 per cent cap, meanwhile, continues to cause uncertainty, and it remains to be seen whether insurers will pre-empt a change of government in their premium applications.

Australian Medical Association president Tony Bartone said a 2 per cent cap would put “significant pressure on the smaller fund members”.

“We will be concerned if that leads to less transparency or less surety about what will be covered or what won’t be covered,” Dr Bartone told a Members Health Fund Alliance meeting.

He said a cap and below-cost Medicare rebates would also put the squeeze on health practitioners and probably lead to higher out-of-pocket costs for patients.

Australian Prudential Regulation Authority official Peter Kohlhagen said the premium application process would allow APRA to raise any concerns over the impact of a cap.

“To move from a world where the most recent premium increase was a bit south of 4 per cent … to a 2 per cent world, is going to be challenging to a number of insurers,” Mr Kohlhagen said.

While Labor leader Bill Shorten has accused insurers of profiteering, Mr Kohlhagen reiterated that capital levels were not too high and the biggest challenge remained rising health costs.