Health insurers touting delayed premium rises, but are they delivering value for money to policyholders?

MedTech News: Health insurers Medibank Private and NIB have postponed their health insurance annual premium increase as hospital and surgical claims continue to remain below expected levels.

Mark Butler MP, Minister for Health and Aged Care, made the announcement for increased health insurance premiums yesterday calling the 2.9% rise “value for money”.

The Australian Medical Association (AMA) has been calling on health insurers to deliver value for money for policyholders following the release of its annual Private Health Insurance Report Card. The report card urged private health insurers to deliver better and fairer value for their policyholders, including the 235,699 new members with hospital cover in the last 12 months (an increase of 0.7%).

AMA President, Professor Steve Robson, said the benefits paid by different health funds differed across several categories. For example, benefits for uncomplicated delivery of a baby differed by $550 (34%) from the lowest to the highest across health insurers, for coronary artery bypass the difference was $747.35 (21%) and for femoral or inguinal hernia surgery there was a $300 difference (45%) between the benefits paid by the different health funds.

“Two patients having the same operation done by the same surgeon in the same private hospital can find that there is up to a $700 difference in the amount they get back from their health fund. We don’t think it is particularly fair for the people who spend a lot of money on their private health premiums and we think it’s time it was really dealt with fairly,” he said.

The report found that virtually no health insurance policies had exclusions 15 years ago. Over time, the number of policies containing exclusions has grown significantly. In 2018, the number of policies with exclusions overtook the number without.

Professor Robson added “And we have seen an increase of 16% in what is called management fees — that is the sum of money that they take out of your premiums to run their health funds. So, we have seen some big increases across the board and we think that customers in Australia, patients, who are having medical procedures want value for money.”

Acting APHA CEO Lucy Cheetham said while the increase was sensible as health costs increase, regulatory bodies, like the Australian Competition and Consumer Commission (ACCC) should be watching over private health organisations’ shoulders to ensure costs to consumers are minimised.

“We welcome some private health insurers deferring their premium increases off the back of their huge profits during the pandemic, that seems only fair. But we also need to make sure that consumers are protected, and health insurers are not using cashbacks (a way of repaying premiums paid during lock downs) to deter consumers from exercising their right to shop around.

“In addition, The Australian Government also needs to do more to protect consumers making sure they get the benefits they pay for when they sign up for a health insurance policy. Loopholes and anomalies need to be ironed out which are costing consumers in out-of-pocket costs and blocking their access to urgent care.”

Ms Cheetham said cost pressures for hospitals, as for Australian families, continue to increase and private hospitals are working with medical device companies to deliver savings for patients and reduce the costs of medical technology, while still supporting clinical decisions made by doctors.

“Recent reforms of the list that sets prices for medical devices [Prostheses List] has given private health insurers an immediate bump of $14 million in savings in the first quarter alone. Savings of up to $900 million are already locked in over four years. This should be passed on to consumers.”

Medibank confirmed that the “give back will be funded from additional COVID-19 permanent net claims savings realised after 31 December 2022 and is not expected to impact Medibank’s operating earnings for the 12 months ending 30 June 2023.”

The AMA, Medical Technology Association of Australia (MTAA) and other key stakeholders have been calling for an independent regulator – a Private Health System Authority – to oversee private health insurance to ensure policyholders are getting fair value for money through a mandated minimum amount that every insurer is required to return to patient care.

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