APRA data exposes insurer claims on 88 cents as a untrue

CLAIMS by the health insurance industry that it is returning 88 cents in every dollar from premiums to members via payments to private hospitals is demonstrably untrue. In fact, the insurers haven't achieved that annual result since 2019-20.

According to year-on-year reports by the Australian Prudential Regulation Authority (APRA), health insurers short-changing hospitals is now entrenched, with a massive shortfall in payments of over $3 billion in just
the last three years.

"These ongoing losses are resulting in insured patients getting less for their ever-increasing premiums each year," APHA CEO Brett Heffernan explained.

"They are losing out on choice and access as hospitals have closed entirely, while 70 services in other hospitals have been permanently cancelled. Quality is also compromised as hospitals cannot invest in the treatments, equipment, services and staff patients expect from world-class private hospitals.

"These cornerstones of private healthcare are under increasing threat due to insurer profiteering.

"The catchcry from insurance companies is they cannot keep pace with the rising costs of healthcare. But the APRA data belies that claim, with insurers banking never-before-seen profits of more than $5 billion over the same three years.

"On top of that, in 2023-24 the insurers also increased their 'management fees' by a whopping 18% to now reap $3.5 billion a year from this alone. At a time when most sectors are belt-tightening, the insurance companies are making money hand over fist."

The accumulated data from APRA (see insert) shows the reality that health insurers are nowhere near the 88 cents-in-the-dollar benchmark, with every percentage point below it representing hundreds of millions of dollars in unrecouped expenses for hospitals.

"Noone will be shocked that insurance companies behave this way. But it underscores the critical need for the Federal Government to play its role in protecting Australian health insurance holders.

"Each year the Federal Health Minister approves premium increases. It is incumbent on the government of the day to ensure the 15 million Australians with private health insurance are protected and the premium increases it approves actually make it, as intended, to healthcare providers.

"Neither side of politics can afford to ignore the deepening crisis in private hospitals, which is already manifesting in more pressure on an overstretched public hospital system.

"There is an easy fix. The government can mandate that 88 cents-in-the-dollar flows from insurance premiums to hospital care, or it can re-direct the funds from the rebates on health insurance to meet hospital costs. Either way, there is zero impact on government coffers or patient pockets.

"The APHA raised these sensible, practical policy options in November 2024 in response to the Private Hospital Viability Health Check. So far the government has refused to act."

-ENDS-

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