Health fund rise not on: PM
By ROSS PEAKE, Political Correspondent
The Canberra Times
A bid for a sharp rise in private health insurance premiums was virtually ruled out
yesterday by the Howard Government.
Prime Minister John Howard made it clear it would be unacceptable for the country's
largest private health fund, Medibank Private, to have a 13 per cent rise.
However, the health insurance industry is alluding to the possibility of HIH-style
collapses if reasonable increases are not granted by the Government.
More than two million people have flocked to the funds under the Government's carrot-and-stick policies.
But the newcomers are hitting funds with expensive claims for pre-existing ailments,
after fulfilling the 12-month waiting period.
Doctors and consumer groups say the funds do not need higher premiums because of their rising memberships and large surpluses.
After a break of several years, several funds including MBF, AXA and HCF are
asking for rises of 4-8 per cent for the annual round of premium reviews.
Medibank Private refused to confirm it was asking for a 13 per cent rise because of
a 60 per cent jump in pay-outs caused by the influx of new members.
Mr Howard moved quickly on the politically sensitive issue, saying this application
would be treated sceptically in light of the public funds poured into the funds.
"I think 13 per cent sounds, to say the least, a bit rich," he said in New York. "No
assumptions about automatic government approval can be made...I'm not happy
with that.
"This is a two-way process and I say to the private health funds, the Government
has given you a lot of assistance.
"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."
The health funds have been under pressure not to apply for an increase over the
past few years as they have benefited from the Government's policies.
Medibank Private said premiums for its three million members had not risen for three
years.
Australian Health Insurance Association chief executive Russell Schneider said
although the industry was viable, a reasonable rise was justified because of the
extra claims.
"If the fund needs that [13 per cent] to continue to pay its claims, I think it would
have to be justified because, as we've seen from the recent HIH situation, nothing
could be worse than to have an insurer deliberately holding down its price below its costs and getting to the point where it can't pay its claims."
MBF spokesman David Jones said members had not had a premium rise for two years.
"I think a modest price rise would be understood," he said.
Health Minister Kay Patterson will consult with Mr Howard and Treasurer Peter
Costello before deciding whether the applications will be granted.
Her office said a health fund which was rebuffed could apply for lower premium rise.
Labor health spokesman Stephen Smith said the Government should reject a 13 per
cent rise because it would cost families up to $200 a year.
The Howard Government introduced the 30 per cent rebate for those paying
premiums, along with penalties on high-income earners who have no coverage, to
arrest the steady decline in fund membership evident since the introduction of
Medicare.
The lifetime health cover scheme also imposes extra costs on people who wait until
30 to take out health insurance. Recent Australian National University research
predicted government spending on private health insurance subsidies would blow out
to more than $2.3 billion in 2003-04. Any increase in premiums would further
increase the burden on taxpayers of funding the 30 per cent rebate.