Medibank Private makes pitch for health fee hike

Medibank Private has highlighted the rising cost of providing hospital cover as the government considers premium increases.

Australia’s largest health fund, Medibank Private, has sought to highlight the rising cost of ­providing hospital cover to members as the federal government considers another round of premium increases.

Ahead of releasing its half-yearly results on Friday, Medibank has pointed to a 4.3 per cent increase in benefits paid out last financial year, when successful claims totalled $5.1 billion.

The rising cost of care has prompted Medibank to take a hardline approach to negotiations with private hospitals, ­however, its analysis suggests members are also utilising more services more often, a trend the government has also noted with regard to Medicare.

Childbirth remains the most common overnight procedure, followed by rehabilitation, knee replacements, shoulder procedures and hip replacements.

The number of eye operations has ­increased 15.3 per cent in five years — Medibank now orders surgeons to sign a ­declaration that the procedure is clinically necessary — while sleep studies have increased 12.6 per cent.

Health Minister Sussan Ley believes insurers should absorb more of the cost increases rather than pass them on to members in the form of higher premiums.

She recently ordered health funds to resubmit annual applications for premium increases with a lower figure in mind or provide financial statements to show the requested increases are necessary.

By this week’s deadline, every health fund had either proposed a lower premium increase — Medibank, Bupa, HBF and NIB are believed to be among those pitching lower — or provided ­financial statements.

Ms Ley will take advice from the Australian Prudential Regulation Auth­ority and is likely to make a decision this month or early next month, with premiums traditionally increasing on April 1.

Ms Ley has also been reviewing the health insurance sector, with reforms regarded by some in the industry as a likely trade-off for lower premiums.

The health insurance rebate is likely to remain, however, the government is examining whether policy levers can reduce costs, increase competition and make insurance more attractive.

Medibank managing director George Savvides said yesterday that rising costs in the private sector threatened to reduce its ability to take pressure off the public sector.

“One key challenge for the government is to clearly define the role of private health ­insurance within the wider health system and urgently ­deliver the policy settings that support it,” Mr Savvides said.