Profit spike bears down on premiums
The nation’s largest health insurer has reported a surge in profits, strengthening the Federal Government’s hand in pushing for more modest premium increases.
Medibank Private’s controversial drive to offload responsibility for complications including hospital-acquired infections on to private hospitals and patients has helped deliver the insurer a 58 per cent jump in net profit to $227.6 million in the six months to December.
The report of the profit spike, which has also been underpinned by crackdown on benefit payouts, came days after the fund complained it was under pressure from an increase in the range and frequency of member claims. The complaint was made in a bid to manage expectations about the size of any reduction in premiums for the coming year.
Health Minister Sussan Ley has asked health funds to resubmit their planned premium increases. Under current arrangements, each year health insurers are required to obtain Government approval for their premium hikes, which have averaged above 6 per cent in recent years.
Last month, Medibank Private flagged that it would resubmit its 2016, and on 11 February rival HBF announced it would seek a lower premium increase than the 5.96 per cent rise it first asked for.
The insurer, which had initially been critical of Ms Ley’s call, said the Government’s subsequent push to overhaul Prostheses List and reduce the cost of medical devices provided in private hospitals had been crucial.
“The Minister is now showing that she understands the need to relieve pressures on health funds and their members rather than simply demand that funds lower premiums,” HBF Managing Director Rob Bransby told the West Australian. “We expect the change in prostheses pricing to deliver savings of millions of dollars to HBF and, ultimately, our members.”
Ms Ley said HBF’s announcement was an “encouraging sign” for consumers, and hoped it would encourage other insurers to follow suit.
“The Government is serious about working with the private health sector to deliver a better deal for consumers, and there are real opportunities to deliver real reform,” the Minister said, adding that the insurers were holding $5.1 billion in excess capital.
Industry analysts said Medibank’s profit growth would make it difficult for the fund to fight against lower premium increases, and one anticipates a rise of just 2 per cent from 1 April.