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Debate heats up as PHI premiums rise

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Private health insurance continues to dominate political debate, with the Government approving a 3.95 per cent increase in premiums while the Labor Opposition promises to crack down on the industry.

Private health insurance (PHI) premiums will rise by almost $150 a year for most families from April 1, following Health Minister Greg Hunt’s nod to the providers to hike their fees twice as much as the rate of inflation – which last year was about 2 per cent.

The Minister points out, however, that the increase is the lowest since 2001 and would have been much higher if he hadn’t reined the insurers in.

Last year’s PHI premium increase was 4.84 per cent.

“Already, the significant private health insurance reforms that we announced in October last year have made an impact and they will continue to drive down costs,” Mr Hunt said.

The Minister said the Government’s reforms included $6.4 billion every year to the PHI rebate, and $1.1 billion savings to the prostheses list.

But Opposition Leader Bill Shorten has put the health insurance industry on notice, using an address to the National Press Club to declare that premium increases were out of control and that business as usual could not be sustained.

He said the PHI industry was becoming “a con”.

A few days later, the Opposition Leader announced plans to cap PHI increases to 2 per cent for two years in order to save families an average of $340.

He said Australians were tired of being “ripped off” by premium hikes.

Mr Shorten said his plan was a cost-of-living measure.

“The idea that taxpayers pay $6 billion a year to the big insurers, the idea these big insurers are making record profits and yet the premiums keep going up and up… can’t be sustained,” he said.

“Business as usual won’t cut it any longer for private health insurance.”

The Opposition Leader also promised that if elected, a Labor government would ask the Productivity Commission to review the whole private healthcare industry, with a focus on its value and quality.

Labor’s move brought immediate condemnation from the insurance lobby, but high praise from consumer groups.

Prime Minister Malcolm Turnbull accused Labor of trying to destroy the PHI industry and said Mr Shorten was making up policy on the run.

Mr Shorten and Shadow Health Minister Catherine King rejected the accusation and said private health insurance played an important role in Australia’s health system.

“But under Malcolm Turnbull, Australians are questioning the cost and value of private health more than ever,” they said in a statement.

“The Turnbull Government is failing to address this crisis and help Australians with the affordability of private health insurance, and as a result, people are walking away from private health altogether.

“Labor is choosing to put Australian families first, instead of the interests of the multibillion-dollar private health industry.”

The AMA has been at the forefront of the PHI debate and has repeatedly called for junk polices to be banned.

AMA President Dr Michael Gannon acknowledged Mr Hunt’s role in keeping this year’s premium hike to a lower rate than has previously been the case, but he said much more needed to be done to ensure consumers were getting value for money.

“Everyone should be asking what they’re paying for,” Dr Gannon said.

“Too often, patients or their loved ones find out only when they get sick that the cover they’ve purchased is not fit for purpose.

“There are too many policies where there are exclusions, carve-outs, caveats. The most egregious of these policies are those that tell you that you’re entitled to treatment as a private patient in a public hospital.

“Well, if you’re an Australian citizen, you’re entitled to free treatment in public hospitals, and there’s no discernible advantage. I’ve said many times that I need to be convinced why that’s not junk. It’s a level of coverage which does not support universal health care, and we think it’s a problem.”

AMA Vice Dr President Tony Bartone said PHI policies were far too confusing for consumers and there needed to be a simplification.

“Any increase on a product that’s not offering value to its consumers has got to be a concern,” Dr Bartone said.

“We’ve been asking for better value products, not products that actually increase in cost.”