Private health insurers are under fire for pocketing “huge” profits while planning to raise premiums on some products by up to 8% and failing to support private hospitals.
Latest data from the Australian Prudential Regulation Authority (APRA) show that private health insurance sector profits have almost doubled in the last 12 months, to around $2.2 billion.
Australian Private Hospitals Association CEO Michael Roff said it was unconscionable for private insurers to prioritise “huge” profits, while private hospitals struggled to operate.
Figures showed the proportion of private hospitals reporting a profit or breaking even had dropped from 89% in 2019-20 to 30% in 2021-22, he said.
“Private health insurance companies continue to make huge profits following the pandemic, while refusing to meet private hospitals halfway as the costs of providing essential health care soar,” he said in a statement.
Many private hospital operators were experiencing their worst time “in living memory” with the cost of food, power, medical supplies and technology up “an estimated 10-15% in the last year”.
Yet health insurers were only offering hospitals increased payments of 2-3%, he said.
“In the meantime, private health insurers are still sitting on about $700 million in deferred claims liability — premiums that members paid during the COVID-19 pandemic when they couldn’t use their health insurance.”
He said hospitals had closed or entered administration in Tasmania and NSW, while other maternity units and ICUs were closing as well.
The APRA figures released on Wednesday showed that profits for the private health insurance sector grew from $1 billion in 2022 to $2.2 billion to the end of June 2023, largely due to better performing investments.
Meanwhile, the AMA is renewing calls for an independent private health insurance regulator, in its submission to the Department of Health and Aged Care’s consultation on private health incentives.
AMA president Professor Steve Robson said many Australians were being priced out of private health insurance policy products, following reports that some providers were set to increase gold health premiums by up to 8%.
“Private health policy has been on the ‘set and forget’ mode for some time now, meaning the system is falling behind changing customer needs and demographics,” Professor Robson said in a statement.
“There is currently a policy reform black hole in the private health sector, leading to a system that doesn’t properly balance the needs of hospitals, medical device manufacturers, doctors, insurers, and most important of all — patients.”
More information: APRA: Media release; 23 August 2023