Premiums up: Patients pay price, hospitals left in lurch

WITH the announcement that health insurance premiums are going up this year by an average 3.73%, consumers will be counting their pennies while private hospitals will count the losses.

"Today's premium hike approval by Federal Health Minister Mark Butler is a windfall for insurance companies," APHA CEO Brett Heffernan said. "With 15 million Aussies holding private health cover at an average policy of $4,000 per year, the 3.73% increase will pour an extra $2.23 billion into health insurer
coffers.

"Australian families pay these premiums to get the best care, not to pad the bottom line of insurance companies. But the providers of healthcare treatments and services, private hospitals, don't expect to see much of it in payments for treatments and care.

"The recent history of record profit-taking by insurance companies has seen a shortfall in funding from insurers for treatments of $660 million in 2022, almost doubling to $1.135 billion in 2023 and a massive $1.254 billion last year. Insurance companies seem to have been emboldened by the Federal Government's lack of appetite to act to reform the failed funding model.

"The tale of the tape is stark. With last year's moderate average 3.03% premium increase, the Australian Prudential Regulation Authority exposed that the insurers banked $1.85 billion in profits. It was their second biggest cash bonanza ever, eclipsed only by 2023's record $2.2 billion profit. On top of that, insurance 'management fees' also rose 18% over 2023-24 to reap another $3.5 billion a year from premiums.

"It's not hard to make never-before-seen profits when you aren't paying your bills in full. When people's premiums are being banked by insurance companies instead of covering the actual costs of healthcare in private hospitals, is it any wonder marginal services, like maternity and psychiatry units, are closing?

"Australians are paying higher and higher premiums for health insurance each year in the expectation that choice, access and quality are guaranteed. And that they will get their doctor or specialist, in a state-of-the-art private hospital, in a timeframe of now.

"Increasingly, that value proposition is in failing. Since 2022 almost 20 private hospitals have closed their doors entirely and more than 70 services in other private hospitals permanently cancelled, leaving consumer choice and access diminished, investment in quality compromised and public hospital waiting lists longer and deeper.

"That means patient clinical needs are disrupted in having to relocate to another private hospital, often much further away, to get the care they need, or go public and add to the public hospital crisis. Local communities lose much-needed healthcare assets. It compounds in regional areas where public and private hospitals often tag-team to provide complementary care.

"When the Federal Health Minister approves premium hikes each year the Federal Government cannot abrogate responsibility for how those funds are, ultimately, spent, siphoned or squirrelled away by insurers.

"The last thing Australia's health system needs is more private hospital services sacrificed due to insurance company greed and government indifference."

-ENDS-

Next Media Centre:
26/2/2025 Insurers maternity pitch fails to deliver

Previous Media Centre:
18/2/2025 APRA data exposes insurer claims on 88 cents as a untrue