Medical insurer's sick joke
By MALCOLM FARR
05feb02
The Australian
A "NOT HAPPY" John Howard yesterday angrily scoffed at a demand from the nation's biggest private health insurer, Medibank Private, for a 13 per cent premium increase.
"I think 13 per cent sounds, to say the least, a bit rich," the Prime Minister said from New York. "I'm not happy," he told reporters before flying out to Singapore.
The bid also has angered some of the three million people who would not be threatened by the rise if they had not were forced by the Government to take up private cover. Medibank Private's premium increase would add about $200 a year to the health insurance bills of an average family.
All but about 10 of Australia's 44 private health insurers last month sought Government approval for premium increases, with any changes to begin in April.
Mother-of-two Gabrielle Johnson of Pagewood said yesterday the push to increase premiums had convinced her to cancel her cover because she was not receiving value for money.
"Now that the children are born, I don't see the value in keeping the cover," Mrs Johnson said.
"If I needed to have an operation, I am comfortable getting it done in a public hospital."
Medibank Private's request would add up to $180 million a year to the cost of the Government's health insurance tax rebate scheme, which reimburses 30 per cent of premiums.
Already the total scheme costs taxpayers more than $2 billion a year and could be boosted significantly by the current round of premium applications.
Combined with the threat of a tax penalty, the rebate last year increased dramatically the number of people with private cover, pushing Medibank Private's membership from two million to three million. It is understood the only proposal for increased premiums in double figures was Medibank Private's, its first since 1999 when the rise was 2 per cent.
"This is a two-way process and I say to the private health funds, the Government has given you a lot of assistance," Mr Howard told the Nine network.
"We have provided you, via the 30 per cent tax rebate, with a great deal of additional business and you have an obligation to make certain that you return full value to the Australian public."
Labor's health spokesman Stephen Smith said it was almost impossible to see how Medibank Private could justify its claim.
Mr Smith said the industry made a profit of $795 million last year and boosted its reserves by about 50 per cent to $2.38 billion.
"Not only health fund members, but all Australian taxpayers, are now paying a considerable amount for private health insurance," he said.
Last November Medibank Private reported a surplus for the year of $105.9 million, its third record year in a row, which helped build its reserves to just over $500 million.
While its revenue increased, its outlays rose by 45 per cent in 2000-2001, as new members ended the compulsory 12 month no-claim period and began using hospital services.
Medibank Private yesterday declined to discuss its premium bid.
The chief executive of the Australian Health Insurance Association, Russell Schneider, said most funds would be entitled to increase premiums by 8 per cent, merely to cover inflation over the past two years.
"It will be a couple of coins extra every week, which might be more than people will like, but will be within their capacity to pay," Mr Schneider told The Daily Telegraph.
He said funds had been hit by an increase of 600,000 claims for private hospital care.
The costs of services also had jumped, he said.
"If the Government gave charges by hospitals and doctors the same sort of attention they give health funds, there might not be premium rises," said Mr Schneider.
The strategy to increase private cover had assumed that many of the new members would be young and unlikely to make claims.
However, said Mr Schneider, the benefits claimed by members aged under 55 had increased by 55 per cent, indicating a significant number of people had planned their fund membership and medical treatment.
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