Double whammy for health fund members
Exclusive: Health fund premiums are set to rise for the second time in six months today, as it can be revealed angry customers are abandoning for profit health insurers for not for profit funds.
A News Corp survey of premium rises has found the three biggest for-profit insurers are raising their premiums by more than five per cent - nearly twice the industry "average" of 2.74 per cent.
Medibank, Bupa and nib are increasing their Bronze policies by more than five per cent, Silver policies are rising by almost six per cent, Gold policies are rising the most - more than six per cent.
At nib Gold policies are going up by a staggering eight per cent.
In a double whammy for health fund members it comes at the same time as the government's tax rebate for health insurance is cut by around half a per cent to 24.6 per cent adding another $25 a year to premium costs.
Members Own, the group that represents 25 of the nation's not-for-profit health funds, has produced new data showing more than nine in ten of the people who joined a health fund in 2020 signed up to a not-for-profit.
"In the 12 months to December 2020, 102,936 people joined health funds and of them 93,825 joined one of ours, it's just extraordinary," Members Own chief Matthew Koce told News Corp.
While these health funds are not necessarily cheaper, Mr Koce said young people were 'doing their research and are ethically driven and as a result are increasingly turning to members health funds".
A key reason Members Own health funds were seen as value for money was that they paid back 90 per cent of their premium revenue in benefits to their members.
By contrast the big three for-profit funds - Medibank, Bupa and nib - paid back on average just 86.1 per cent of their premium revenue to members.
He said these fund needed to spend money paying dividends to their shareholders rather than spending it on their members.
Industry sources disputed the analysis and said 52 per cent of the increase in PHI memberships over the last 12 months to December 2020 (60,115 out of 116,031) were from for-profit funds.
A spokesperson for Medibank said the health fund's focus was squarely on the service, experience and value provided to customers.
"We grew policyholder numbers by 49,000 in the 6 months to December, while also increasing our market share and achieving record customer advocacy across both the Medibank and ahm brand," the spokesperson said.
nib Managing Director, Mark Fitzgibbon said "all but a couple of the so-called not-for-profits made profits in 2020.
"Its nonsense to suggest we aren't all focused upon the same outcomes of protecting our members, growing our businesses and commercial sustainability. For our part, we grew members by 3.2 per cent compared to the industry's 1.7 per cent. The numbers speak for themselves."
Industry lobby group Private Healthcare Australia (PHA) is blaming high prices for medical devices like hip and knee, cardiac and other implants for the premium hike.
It commissioned a report by consultancy group Evaluate which examined a basket of the most common medical devices used in Australia, which found:
•Australians pay 21 per cent more than the United Kingdom
•Australians pay 38 per cent more than South Africa
•Australians pay 36 per cent more than New Zealand
"There is no medical reason the exact same devices should be that much more expensive in Australia. It is a simple result of government regulation keeping prices way too high." PHA CEO Dr Rachel David said
"Medical device costs are the largest contributor to the rise in private health insurance premiums, and the Morrison Government must do more to protect Australian consumers," said Dr David.
PHA is asking the government to overhaul the government run pricing system underpinning medical devices in the May budget.
Medical device manufacturers have conceded prices in Australia are too high but the industry said if the health insurer's proposal was adopted health funds would be able to refuse to pay for medical devices.
Originally published as Double whammy for health fund members