The elective surgery freeze around the country last financial year delivered a big bonus to health insurers, but little of that has been passed on to consumers.
The latest Australian Competition and Consumer Commission (ACCC) annual report into the private health insurance industry has found that insurers paid out $500 million less in hospital and extras benefits in 2019–20 compared to the previous year.
The report points out that the reduced benefit payout was the result of government-imposed restrictions during the COVID-19 pandemic, which limited non-urgent elective surgery and non-urgent extras treatments (including most dental, optical and other health services).
While most health funds issued a six-month pause to their scheduled premium increases in April this year, as a result of the COVID situation, most funds then went ahead with the increase in October (HBF is one of the few exceptions that cancelled a premium increase for the full year).
Despite the pause, average premium increases have continued to be higher than inflation and wage growth.
According to the ACCC report, health funds say that they have returned substantial sums to policyholders since the pandemic began, including ongoing relief to those suffering financial hardship.
The insurers have also indicated that they will use any remaining profits gained from COVID-19 restrictions to tackle the accumulated demand for non-urgent elective surgery.
ACCC deputy chair Delia Rickard said it was important that these commitments from health insurers were followed.
“The ACCC expects insurers to act on public commitments to return any profits gained from COVID-19 to policyholders, including through hardship measures such as premium waivers and discounts, and through the timely management of any built-up demand for non-urgent elective surgery,” Ms Rickard said.
Despite the increasing costs of health insurance, the latest Australian Prudential Regulation Authority (APRA) figures show that the number of people with private health cover rose in September, bucking the steady decline that was recorded in the four previous quarters.
In the year to September 2020, hospital treatment membership increased by 58,775 and older Australians taking out hospital membership led the charge, with membership in the 50-plus age group increasing by 70,689 people in the year to September 2020.
While the quarterly APRA figures show a turnaround in the number of Australians with private health cover, the ACCC’s figures for the 2019–20 financial year still show a decline from 44.3 per cent in June 2019 to 43.6 per cent in June 2020.
“The overall decline in the proportion of people with hospital policies in 2019–20 was possibly due in part to the economic slowdown associated with COVID-19,” Ms Rickard said.
“However, some have asserted that the pandemic also reminded Australians of the quality of Medicare and the Australian hospital system, leading them to question the value of continuing to pay for private health insurance.”
Personal finance expert Joel Gibson explained in the Sydney Morning Herald that it was possible to make big savings by shopping around.
“Sometimes, a similar policy with a different provider is hundreds of dollars cheaper,” he said.
“As a new customer, you can often get up to six weeks of free cover or hundreds of dollars in cashbacks simply by joining.”
Mr Gibson explained that other ways to save on health insurance included reviewing your extras cover as you do not need it to access elective surgery in private hospitals.
Do you have private health insurance? When was the last time you shopped around for a better deal?
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https://www.yourlifechoices.com.au/finance/insurance/baby-boomers-are-missing-out
