Health insurers told to 'have another go' on premiums

The Albanese government is resisting pressure to markedly increase health insurance premiums in another looming cost-of-living blow to struggling Australian families.

Private Healthcare Australia, a peak body that represents 21 health funds, has called for health insurance premiums to increase for 2024 in submissions to government.

The proposed increase is commercial in confidence but believed to be as high as six per cent.

Its chief executive Rachel David said the requests reflected inflation, record claims over the past year and essential costs such as IT upgrades to combat the growing threat of cyber attacks.

Health Minister Mark Butler
Health Minister Mark Butler is pushing back against increases to insurance premiums.

"The cost of medical and hospital services increased 5.9 per cent this year and there's been a 9.6 per cent surge in hospital admissions funded by insurers," she said in a statement on Tuesday.

"This is putting pressure on premiums."

More than half of Australians have hospital or extras cover.

Federal Health Minister Mark Butler said he wasn't inclined to approve the industry's proposed premium increase based on the information it had provided.

"I've written to every private health insurer, directing them to have another go and put forward a more reasonable figure that considers their years of record profits and the declining proportion of premiums they return to customers, particularly while household budgets are under pressure," he said.

A resubmission is due by mid to late January, with the final change to take effect on April 1.

The 2023 premium increase was 2.9 per cent, below the 10-year average of 4.4 per cent.

The peak body said a record $23.3 billion in claims benefits were paid to members by health funds in the year to September 30, up 10 per cent on the previous year.

Inflation in the health sector jumped 0.8 per cent over the September quarter across Australia's eight major cities, taking it to 5.4 per cent over the past 12 months.

Dr David said inflation was hitting the health sector hard.

"Hospitals are struggling with the rising costs of recruitment, power and food and this flows through to health funds," she said.

"Every week, hospital groups are asking major health funds for additional funding beyond their agreed contracts to chase inflation."

As well, the peak body blamed the government's "prescribed list" of medical devices for  driving up premiums as surgical claims return to pre-pandemic levels. 

"Australians are paying the highest prices in the world for medical devices due to an outdated price setting arrangement with multinational medtech companies," Dr David said.

"We are paying 30 to 100 per cent more for common medical devices such as insulin pumps compared to people in New Zealand, the United Kingdom, France and South Africa."

She acknowledged many Australians were "doing it very tough" and said the government, health department and Australian Prudential Regulation Authority were rightly subjecting health fund pricing to detailed scrutiny.

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