MTAA challenges the need for Medibank, Bupa and NIB to hold even more cash in the bank

The Australian Prudential Regulation Authority (APRA) has commenced a consultation aimed at updating and strengthening the capital framework for private health insurance (PHI).

“With the PHI industry under pressure from the twin dilemmas of worsening affordability and adverse selection, a strong capital base is vital to keep insurers resilient and able to pay all legitimate claims from policyholders.” APRA Executive Board Member Geoff Summerhayes said.

Medical Technology Association of Australia (MTAA) CEO Ian Burgess called for APRA’s remit to be widened to prioritise ensuring annual premium increases did not have a negative impact on membership numbers.

Mr Burgess also said the ‘Big 3’ corporate health funds should be subject to different rules to smaller community health funds, given they were sitting on 90 per cent of the sector’s $1 billion in profits over the past two premium years.

“APRA’s own figures show the ‘Big 3’ corporate funds have billions of dollars in profits and assets sitting in the bank – more than enough to survive a rainy day – yet keep raising their prices at twice the rate of inflation.

“The number one priority for APRA should be intervening to stop Medibank, Bupa and NIB continuing to price their customers out of the market, because once they’re gone, current tax penalties mean it’ll be an uphill battle to get them back.

“If it means the ‘Big 3’ insurers trading off lower profits and assets for lower premiums for a few years to stem the exodus while government reforms kick in, then that’s a better outcome for consumers and the market than accepting this current death spiral as a fait accompli.

“It’s not like private health insurers are subject to natural disasters that occur overnight – if the ‘Big 3’ can’t see health costs are going to keep increasing, then they’ve got bigger problems than their piggy banks.”

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