Private health pushes back on rates rise queries from Greg Hunt

Private health insurers push back at government calls to reconsider a rise in premiums, as Greg Hunt questions whether the spikes are affordable.

Greg Hunt says the most recent premium increases were the lowest in 20 years and he wants to continue the trend. Picture: Luis Enrique Ascui

Private health insurers are pushing back at Morrison government calls to reconsider a rise in their premiums, as Health Minister Greg Hunt questioned whether the planned rate increases were affordable.

Private Healthcare Australia claims higher premium increases are necessary given delays in reforms to the Prostheses List and the ageing population leading to higher claims costs.

Mr Hunt wrote to insurers late last week after they had lodged their submissions for premium rises, and asked them to reconsider their calculations.

“In considering my role in approving or refusing to approve your proposed changes, I am asking you to strongly reconsider whether your proposed premium change appropriately balances your financial requirements against the affordability concerns of your policyholders,” Mr Hunt wrote in the letter.

“Accordingly, I ask that you resubmit with a revised proposal, if the proposed changes can be lowered, to further support the interest of your policyholders.”

Mr Hunt said the most recent premium increases were the lowest in 20 years and he wanted to continue the trend.

Health funds recorded profits of $1.8bn in the last financial year. Elective surgery claims were reduced given suspensions in NSW and Victoria, but are expected to rise significantly in the next year.

Private Healthcare Australia chief executive Rachel David wrote in a letter to Mr Hunt that “we do not have a single member that wants to increase premiums by even one dollar”.

“In spite of this, pricing must keep pace with rising underlying health costs, and the funds have lodged their premium round submissions based on the data and evidence currently available to them,” she added.

“In the absence of any material savings delivered through policy reform to the Prostheses List, the funds will be constrained by their fiduciary duties to their members. As yet the industry has not been guaranteed sufficient adjustments to the overcharging and over-claiming of medical devices that would warrant or justify resubmissions for the current premium round calculations.”

The federal government committed $22bn in the last budget to reform of the Prostheses List and aims to bring Australia into line with other OECD countries in the cost of medical devices.

PHA claims Australians are paying between 30 and 100 per cent more for some medical devices than people in similar countries. It also said it was concerned about the financial viability of some private health insurers, a consideration that impacted on premium considerations.

Dr David said reforms to the Prostheses List were being “watered down” amid the protests of the medical device industry.

“We have had constant dialogue with the Department and Minister for Health over six years about inflated government-regulated pricing of medical devices on the Prostheses List, and growth way in excess of inflation.

“Health funds have been explicitly prohibited from placing proper controls on this, and as a result Australians are now paying at least 30 to 100 per cent more for the same generic medical devices, than comparable economies.

“We are again requesting a document outlining the timing and likely quantum of savings from the reforms so this can be ­accounted for in next year’s premium pricing. Even if the funds manage to shave off a small amount in response to your letter, it will not be sustainable and could have been much greater had these reforms been promptly implemented.

“The only way to keep downward pressure on premiums is to keep downward pressure on input costs, in particular the ever rising costs of medical devices.”