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PM hits health funds on premium increase
Sydney Morning Herald
By Mark Metherell
While the Prime Minister moved to quash Medibank Private's plans for a 13 per cent premium rise, the health insurance industry said yesterday that it was fighting to keep increases below inflation.
In New York, John Howard lambasted a proposed 13 per cent rise by the government-owned Medibank Private as "a bit rich" and said the Government would look at the proposal "with a justifiable degree of scepticism".
Medibank Private refused to confirm or deny that it had sought the 13 per cent rise. It said its last increase was in June 1999, when its rate rose by an average of less than 2 per cent.
The executives of two big industry groups said health funds were facing a cost build-up which would end the respite from premium increases over the past two years.
But the Australian Consumers' Association said the move for big increases raised the question of whether the Federal Government should review its $2billion health insurance rebate.
The association's health spokeswoman, Nicola Ballenden, said a 13 per cent rise would wipe out nearly half the benefit of the rebate.
Ms Ballenden said the funds blamed premium rises through the 1990s on falling membership; now they were blaming it on increasing membership. "They can't have it both ways," she said.
But the chief executive of the Australian Health Insurance Association, Russell Schneider, said the funds had gone without premium rises while total fund payouts had risen 22 per cent in the year to last September. "Sooner or later, something has to give."
David King, the chief executive of the Australian Health Service Alliance, which represents 28 funds, said several factors were putting pressure on the funds. These included increased use of health insurance, gap coverage, extra doctors' charges and an aging population
An analysis by the alliance on the impact of the Government's Lifetime Health Cover changes said these pressures "will make containing premium increases at the level of inflation increasingly difficult".
The report also warned there was still a danger of people pulling out of insurance because of "the vicious circle" of increasing premiums by funds and increasing charges by hospitals.
The Federal Opposition's health spokesman, Stephen Smith, said Medibank's move contrasted with Mr Howard's election material, which hailed steps to make health insurance "more affordable".
Speaking on Australian television from New York, Mr Howard warned the funds that the Government had given them "a lot of assistance" with the 30 per cent rebate "and you have an obligation to make certain that you return full value to the Australian public".
A spokesman for the Health Minister, Kay Patterson, said the Government would not review the rebate, worth an average of $750 a year to each health fund member.
"The public can be assured the Federal Government will not be rubber-stamping any requests for premium increases," she said.
Senator Patterson said she would determine what, if any, increases would be allowed in consultation with the Prime Minister and the Treasurer, who would look "long and hard" at applications.


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