Health funds plead for help out of death spiral

HALF the nation’s private health funds will soon be in such dire financial distress that some will not survive the COVID-19 pandemic, the peak industry body representing the funds has warned.

More than 30,000 people dumped their health cover in the 12 months to June, with health fund profits halved.

Last year the financial regulator predicted only three of the nation’s 38 health funds would survive past 2022, with warnings some funds may be forced to merge to survive.

“About half the funds will be in financial distress in the sector unless something changes, unless we get some sense from the federal government that help us control costs,” Private Healthcare Australia chief Dr Rachel David told News Corp Australia.

“The likelihood of all funds pulling through this period is very low.”

She said the industry regulator would have to step in to organise mergers between atrisk health funds with larger, more profitable insurers.

Health funds are in a dangerous death spiral as young people quit, while people in their 70s are gaming the system by waiting until they need surgery before they join and driving up premiums. Someone who waits until they are 70 to join a fund can save hundreds of thousands of dollars in premium payments over their lifetime. While copping a $3700 penalty for joining late, they are able to claim up to $40,000 in surgery costs.

Doctors and health funds are crying out for the government to announce major reforms to the sector in the October Budget, including raising the penalty payment for late joiners.

Dr David said action must be taken to reduce the impact of ballooning medical device costs, which have added $1000 to the price of hip and knee replacements.

Rules that allow public hospitals to pressure people to charge their health funds for treatment they are entitled to for free under Medicare should be tightened to save fund san other $1bn, she said.

Other changes would result in health funds being able to cover treatment that occurred outside hospitals, where treating someone in their own home rather than a high-cost hospital bed could save money.

Members Health Fund Alliance chief Matthew Koce said the government must raise the subsidy it provides for health fund membership back to 30 per cent of the premium cost.

Federal government cutbacks have seen the rebate shrink to cover just 25 percent of premium bills.

The federal government has already simplified health fund policies into four new categories and slashed the price health funds have to pay for medical devices such a ship and knee replacements, but premiums are continuing to rise by two to three times the inflation rate.

“The federal government’s Gold, Silver, Bronze and Basic reforms have been in full force since April this year, but they have not reversed the trend or changed the underlying numbers,” Australian Medical Association president Dr Omar Khorshid said.

“It is time for more reform. It is time for the government to stop underfunding the public and private health systems, time to stop making ‘savings’ at the expense of quality health care, and time to focus on fixing the system .”

The Galvin family, from left, Araylia, Tallulah, mum Mieke, dad Neil and Julius.