The prudential regulator has backed calls made by the ALP and others for an independent review of the private health insurance (PHI) sector, warning that “a new approach is urgently needed.”
He also warned of the impact on consumers, saying that “policy holders will be the first casualties, through higher premiums and reduced benefits.”
The speech, given at the Members Health Directors Professional Development Program in Sydney this week, warned that only three private health insurers would remain viable by 2022 on the current trajectory, with “too many PHIs seemingly waiting for the Government to find a miracle cure”.
The Consumers Health Forum of Australia welcomed the comments from Mr Summerhayes.
“When its own regulator says a new approach is “urgently needed” it is time for the Federal Government to bite the bullet and launch a thorough inquiry into private health insurance,” said CHF CEO Leanne Wells.
Medical Technology Association of Australia CEO Ian Burgess said it was proof insurers would rather “destroy their own products than lower premiums using their own profits”.
“The only way to stop private health’s death spiral is to stop the exodus of customers. The only way to do that is force the ‘Big 4’ insurers to drop their premiums below zero,” Mr Burgess said.
“Private health insurers are self-destructing and the government must step in and save private health from itself.”