Private health insurers are enjoying increased profits and a drop in benefits paid to members.
For the tens of thousands of Australians struggling to maintain their private cover, and who are concerned about the annual increases in premiums due next year, that news might rankle. The average increase in 2021 was 2.74 per cent with some funds lifting premiums by 4 and 5 per cent.
The regulator, the Australian Prudential Regulation Authority (APRA), says in its quarterly report that premium revenue grew 5.4 per cent over the year to $26 billion, due to a combination of membership growth and premium rate increases. At the same time, claims growth remained lower than in previous years – down 0.8 per cent – due to COVID restrictions and lockdowns.
Coinciding with the APRA report, the Consumers Health Forum released the results of its Australia’s Health Panel survey into health insurance, which showed that a majority of those surveyed – including those with insurance – did not believe private health insurance was value for money.
Read: Funds must return what they save
The survey indicated that many were dissatisfied with the actions of insurers since the pandemic and many were unaware of the promises to ‘give back’ as a result of savings health funds had accrued during the surgery hiatus.
(Several funds delivered one-off savings to members due to COVID restrictions on procedures including elective surgery.)
The survey found that 64 per cent of panellists reported their health fund had neither offered nor paid any reimbursement. Those who did receive a reimbursement said it was inadequate.
Health forum CEO Leanne Wells said the Australia’s Health Panel survey results, and now the APRA figures, provided yet more reason for a thorough Productivity Commission inquiry into private health insurance.
She said: “When the survey panellists were asked if they believed health insurance was affordable, only 18 per cent believed it was, with an additional 37 per cent reporting that it was maybe affordable. Similarly, only a small minority (14 per cent) believed they were getting value for money from their insurance and a majority (51 per cent) believed it was definitely not value for money.
“Forty per cent of panellists said subsidies currently totalling at least $6 billion a year should not be payable to for-profit health funds.”
Ms Well says “fundamental and systematic restructuring” of the funding and costs of the private health system is required – in particular for those with reduced access such as elderly Australians and those in rural areas.
Read: Bill shock undermining the sector, say funds
The survey surprisingly found that the Lifetime Health Cover (LHC) loading was a disincentive to joining a fund rather than an incentive.
The Consumer Health Forum surmised that the age limit of 31 was too low and should be raised.
“These sorts of anomalies in the current system should convince the government that an independent Productivity Commission review is urgently needed and should be conducted before any further big changes to the system,” Ms Wells says.
Health insurance expert Andrew Davis was more buoyant in his assessment of the sector, saying that in the past 12 months, it had experienced strong growth driven by both new entrants and a big reduction in the number of people cancelling their policies.
“People with health insurance overwhelmingly believe it is a valuable product and are prepared to make considerable sacrifices to maintain cover,” he said.
“At the same time, they’d like to spend less, which is why it can be a very valuable exercise, every few years, to consider whether a policy continues to be appropriate for current and future needs.
“While the overall rates go up each year, and will increase again on 22 April, many individuals pay less after changing policies to one that is more suitable.”
YourLifeChoices 2021 Insights Survey found that 67.6 per cent of the 7000-plus respondents have private health insurance and that three-quarters of those hope to maintain it for life.
Of those without private health insurance, 68 per cent said they once had cover but had dropped it due to costs and perceived value.
The APRA report says hospital membership during the year to 30 September increased by 204,848 persons, but that the longer-term ageing trend in hospital membership continued. Membership in the 50-plus age group increased by 115,694 persons compared with membership among the younger population (insured persons aged 20 to 49), which increased by 47,597.
Read: Surgery backlog unlikely to be resolved any time soon
Meanwhile, with COVID vaccination rates nationwide at 84.5 per cent for Australians aged 12 and over, elective surgeries – paused due to lockdowns –were again ramping up. But waitlists are long in many regions.
The Royal Australasian College of Surgeons (RACS) warns that in NSW, Victoria and the ACT, elective surgery waitlists are lengthy.
A spokesperson said the vaccine rollout meant GPs’ appointment books had been full, resulting in fewer patients being referred to specialists – and fewer elective surgeries.
Are you clinging to private health cover? Do reports of higher profits and lower outgoings annoy you? Should private insurers be putting more money back in members’ pockets? Why not have your say in the comments section below?
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