“…insurers’ lack of preparedness to deal with growing risks, including declining affordability, a shrinking and ageing membership base, and changes in government policy.
The review found that while insurers were well aware of the risks, very few had credible strategies to mitigate their impact on sustainability. APRA observed a heavy reliance on lobbying politicians and other industry stakeholders due to a concerning assumption by many insurers that Government would provide solutions.
“…that’s not an excuse for doing nothing and hoping the Government will fix everything.”
Now, as the next round of premium increases draws closer, the insurers have chosen to deliberately mislead the public about the causes of premium growth, as they continue to devalue their own product through the suggestion that the listing of new and innovative technologies is somehow a negative.
“What we are seeing is an increasingly desperate attempt by the private health insurance industry to rein in their costs and maintain their profitability by pointing the finger at everyone else,” said Ian Burgess, CEO of the Medical Technology Association of Australia (MTAA) today.
“Medical devices make up less than 10 per cent of private insurance benefits.
“The devices industry was the sole contributor to lower private health insurance premium increases both in 2017 and in 2018. MTAA’s Agreement with the Government is on track to exceed $1.1 billion in expected savings.
“The claim that the listing of new, innovative and more clinically effective technologies is somehow a negative, is completely absurd and demonstrates that the insurers have lost focus on patients,” Mr Burgess said.
Meanwhile, insurer profits continue to increase, with NIB reporting a 9.2 per cent increase in annual profit recently to $201.8 million, with a share price increase of 31 per cent over the past six months, and Medibank Private’s share price up 16 per cent.
The recently released AlphaBeta report, Keeping Premiums Low: Towards a more sustainable private healthcare system, found that insurers have collected 50% more profit from each of their members over the past five years, far outpacing the 21% growth in benefits paid out.
It also found that private health funds have not extracted sufficient economies of scale in the wake of significant revenue growth and many funds are well above the industry average of 9% in operational expenditure, this includes an estimated marketing spend of $400 million.
“After tax profits for insurers are up 15% over the past three years as affordability for ordinary Australian families goes down,” Mr Burgess said.
“Patient and clinician choice is a key part of the value proposition of private health insurance, one that risks being eroded by the false claims made by insurers about the cost of devices,” said Mr Burgess.
“The medical technology industry believes access to a full range of medical technology is one of the key benefits of having private health insurance and we’re committed to helping ensure all Australians lead healthier and more productive lives,” Mr Burgess concluded.