Private health reforms could spike insurance premiums

The government and the Department of Health are facing scrutiny over the impact of private health reforms on private health insurance (PHI) premium increases and policyholder retention.

In December, Federal Health Minister Mark Butler MP unveiled reform proposals for consideration at the first meeting of the Private Health CEO Forum which were dismissed by the Australian Private Hospitals Association (APHA) and Day Hospitals Australia as “another talkfest“. Yet, the real cost to consumers remains unanswered.

During a line of questioning at Senate Estimates, Blair Comley, Secretary of the Department of Health, acknowledged the uncertainty surrounding the proposed reforms.

“The purpose of the pre-Christmas meeting was to put those options to the Private Health CEO Forum to see whether we had areas of consensus,” Comley said. “We’ll meet with them next week and take their feedback. As yet, that hasn’t been worked up into a formal recommendation for government.”

When pressed on the issue of second-tier default benefits, Comley admitted the industry remains divided.

“Some stakeholders want to maintain a bilateral bargaining system between hospitals and insurers, while others advocate for greater uniformity,” he said.

Shadow Health Minister Senator Anne Ruston did not relent, demanding to know whether the Department of Health had conducted any modelling to assess the impact of the private health reforms – if adopted – on premium increases and Australians’ continued participation in private health insurance.

“That will be part of the policy consideration as to whether any package of changes is desirable, because some of those measures could put upward pressure on premiums,” Comley admitted.

Hours after Senator Ruston grilled the government over the timeline for this year’s PHI premium increases – questions that were notably dodged by Senator Malarndirri McCarthy, Minister for Indigenous Australians – Minister Butler announced an average premium hike of 3.73%, effective April 1, impacting 15 million Australians with private health cover.

“Are you concerned that Australians won’t have enough time to prepare or shop around for better deals?” Senator Ruston pressed.

APHA CEO Brett Heffernan said “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.”

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