Federal Government's job to fix funding fiasco

TODAY'S release of the Australian Medical Association's 'Private Health Insurance Report Card 2024' is yet another clarion call to the Federal Government to act now on the funding crisis that has been allowed to
develop and deepen on its watch.

"The AMA's call for 90 cents in the dollar to be mandated in returns from premiums to ensure those providing healthcare are fully paid for the treatments and care they provide mirrors our own call for 88 cents in the dollar," Australian Private Hospitals Association CEO Brett Heffernan said today.

"Clearly, the system is broken when insurers are gouging all points along the spectrum – their members through phoenix polices and higher premiums that don't reach providers, while, in our case, demonstrably short-changing private hospitals to the tune of $3 billion over the last three years, despite insurers pocketing over $5 billion in unprecedented profits.

"Over 2023-24 the health insurers also increased their 'management fees' by a whopping 18% in just one year – up from $2.82 billion to $3.45 billion a year.

"The health insurance industry must be brought to heel for its rapacious profiteering that is compromising patient choice, access and quality in healthcare. That the Federal Government has turned its back on the ethos of complementary public-private hospital care and done nothing to address the crisis, is unfathomable.

"Without quibbling over the AMA's 90 cents or our own 88 cents mandate policies, the issue is that the health insurers are well shy of either mark. The ratio sits at an average 84 cents disbursed for treatment, per dollar collected from insurance premiums.

"An 88 cents payout ratio used to be the norm, but in recent years has only been achieved once, in just the final quarter of the 2024 financial year. The payout ratios for the first three quarters averaged at 82.3 cents, sagging as low as 81.1 cents in the March 2024 quarter.

"Our preferred approach is, and has always been, to ensure patients continue to have access to world-class care without subjecting them or taxpayers to additional costs.

"The government can mandate that 88 cents (or 90 cents) in the dollar flows from insurers, via their premiums, to cover hospital care costs. Or the government can re-direct funds from the rebates on health insurance to meet hospital costs in providing care. These have zero impact on taxpayers or patient pockets.

"For financial year 2022-23, the ACCC identified a net profit increase of 110% for health insurance companies. The health insurers are out-of-control. It's not hard to make never-before-seen profits when you don't pay your bills in full.

"The Federal Government's preferred approach of doing nothing, is unacceptable. I don't think the government appreciates the stress the system and the people in it are under. Hospital CEO's and their staff
are at their wits' end. They are doing all in their power, literally daily, to keep hospital doors open to ensure their patients get the care they need and their colleagues still have jobs.

"Both sides of politics used to celebrate Australia's complementary public-private hospital system as the envy of the world. With the Albanese Government asleep at the wheel, the system has careered off the rails.

"It is the Federal Government's job to fix it, especially when the Federal Health Minister is the one approving insurance premiums hikes every year. The government has a duty to ensure those higher and higher premiums actually reach those providing the treatments and care.

"New investment in hospital services, advanced treatments, medical technology and staffing is fast coming to a full stop. With some 20 private hospitals closing across the country in the last three years and more than 70 services in other hospitals permanently cancelled, consumer choice is being eroded and access and quality compromised. All in the name of insurance company greed."

Private hospitals receive no funding from government but perform 70% of all planned surgeries, account for 1.6 million medical treatments annually, including 54% of all chemotherapy, comprise 62% of mental health hospitalisations and 80% of hospital rehabilitation.

-ENDS-

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18/2/2025 APRA data exposes insurer claims on 88 cents as a untrue

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10/2/2025 It's broke so fix it!