Insurers’ revenue in rude health

HEALTH funds raked in a record breaking $4.5bn more in premiums than they paid out in benefits last financial year.

That’s almost $1bn a year more than the surpluses they made before Covid.

The only reason their final profits did not surge was they hiked their administration costs by a massive 17 per cent since 2019 to cover increased IT costs and extra call centre staff.

They also lost money on investment income as the stock market fell in reaction to inflation and the war in Ukraine.

Analysis of Australian Prudential Regulation Authority (APRA) data by Catholic Health Australia (CHA) finds all of the major funds are failing to meet the gold standard of returning 90 per cent of premiums to their members.

In 2022, the industry as a whole only returned 83 per cent of its $26.6bn premium revenue to members.

NIB provided the worst value, returning a measly 75 per cent of premiums to members.

Catholic Health Australia found insurers have increased their management expenses by 18 per cent since 2019 and are sitting on a $2bn mountain of cash due to reduced claims during pandemic lockdowns.

“If insurers don’t provide good value, more people will simply go without insurance, which would heap extra pressure on public hospitals, further lengthening hospital waiting times,” CHA health policy director Caitlin O’Dea said.

Health fund management expenses have increased faster than benefit payouts, average wages or even prices, former senior health department bureaucrat Charles Maskell-Knight revealed in health publication Croakey.

Private Healthcare Australia chief Dr Rachel David said any excess profits being made by the funds as a result of Covid were being handed back to members via direct cash backs or by postponing price rises.

Australian Medical Association president Professor Steve Robson urged the government to establish a private health system authority – a body with the expertise and the power to develop and drive reforms, while keeping the system fair.