Has Minister Butler reneged on deadline for insurers to pay up?

WHEN is a ministerial deadline and election commitment neither a deadline nor a commitment?

On March 4 of this year Federal Health Minister Mark Butler, via The Australian, reportedly put the health insurance industry on notice "to take action on payments to private hospitals within the next three months, directing they increase funding to a greater proportion of benefits". If not, he "threatened regulatory action".

On April 7 the Minister doubled down at the AFR Health Summit, saying: "There is no question there's been a structural shift of where the money is going in the system and there is a structural shift downwards for private hospitals. There has been a shift up in profitability and management expenses of insurers". Which is why I've said I think there needs to be a lift in the benefits payments ratio from insurers to hospitals. I want them working on that urgently".

The Minister has given voice to these issues ad nauseum over recent weeks in media interviews. Yet, we now learn from Mr Butler's interview with ABC Radio Brisbane's Ellen Fanning yesterday, that he appears to have walked away from his own deadline.

He told Ellen Fanning: "We want to see very clear evidence of what has happened since I put that challenge to them (the insurers) a couple of months ago, and what is going to happen over coming months. And if it's not satisfactory to me, if it doesn't give me confidence that it's going to underpin a strong viability of the private hospital sector going forward, as I said, I will take action".

Our question: "Just how many more months do the insurers have before the Minister will act? Three months ago private hospitals on the brink of collapse put a lot of faith in the Minister's word that he would act, as promised, "within three months"," APHA CEO Brett Heffernan said.

"The Minister's deadline has lapsed. Now that commitment appears to have been fudged and pushed out further, with private hospitals desperate to keep their doors open back in no-man's land and left scratching their heads. Like the Minister's failed Private Hospital Viability Health Check process, that faith, once again, seems to have been misplaced.

"Private hospitals welcomed the Federal Government's pre-election and election campaign pledges recognising the runaway profits and growing management fees of health insurers, while benefits to private hospitals have failed to keep pace with costs.

"The Australian Prudential Regulation Authority (APRA) data shows the shortfall in funding to private hospitals from insurers in 2022 was $660 million. In 2023 this blew out to $1.135 billion and, last year, to $1.254 billion.

"This has been allowed to occur while the insurers are banking $2 billion a year in record profits on top of a recent 18% hike in so-called 'management fees' to also siphon $3.5 billion each year from peoples' premiums. It makes a mockery of the insurers' claim they can't afford to pay their bills in full.

"APRA's most recent quarterly report, released just last week, shows the payment ratio to private hospitals from insurers plummeted further from 83% to a paltry 80.7%. That's virtually 20% of the premiums mums and dads pay for health insurance being siphoned into insurance company coffers.

"It's a far cry from the traditional 88% benchmark, which is an annual threshold the insurers have not paid since 2019-20. All this comes despite private hospital admissions increasing by 3% over the last year (from 4.9 million to over 5.1 million), yet private hospitals face an existential crisis.

"Why won't the Minister make good on his own commitment?"

-ENDS-

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