Health insurance premiums must go up: industry
The Age
By DAVID WROE
and LYALL JOHNSON
Tuesday 5 February 2002
The health insurance industry yesterday warned that there could be more HIH-style collapses if the Federal Government refuses applications to increase premiums.
Australian Health Insurance Association chief executive Russell Schneider said the increases that health insurance companies were seeking, including a reported 13.08 per cent rise by Medibank Private, merely reflected the funds legitimately trying to cover costs.
"There have been no price rises in the past two to three years, yet inflation alone has been 8 per cent during that time," he said. "If (Medibank Private) needs (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 having an insurer deliberately holding down its price below its costs and getting to the point where it can't pay its claims."
He blamed an increase of 300,000 people in the health system, as well as rising costs of medical treatment, for the need to increase premiums.
Mr Schneider's warning came after Prime Minister John Howard yesterday described the 13 per cent rise that federal government-owned Medibank Private reportedly is seeking as "a bit rich".
Mr Howard said: "Given that some of the other funds are looking at much lower increases, I have no doubt that Health Minister Kay Patterson will look very carefully and with a justifiable degree of scepticism about the largest private health fund in the country wanting a 13 per cent increase."
AXA Health yesterday announced it had applied for an average increase of less than 2per cent.
None of Australia's other six largest health insurance funds would comment on what increases they had applied for.
But industry sources said they would be up to 8 per cent.
The proposed increases will be examined by the Private Health Insurance Administration Council, which will make a recommendation to the government in early March.
Consumer groups are unimpressed with the proposed premium increases. Senior health policy officer for the Australian Consumers Association, Nicola Ballenden, said: "It's a pretty favourable environment for health funds at the moment. If companies can't control their costs now, what is it going to be like in a couple of years?"
Public Health Association national president Peter Sainsbury said it was no surprise that health funds were applying for increases to cover claims increases. "It was inevitable that those people would start claiming," he said. "All this was absolutely predictable and obvious. This is just the chickens coming home to roost."
In July, 2000, then Health Minister Michael Wooldridge said: "Because we've got so many extra people in, that'll keep real downward pressure on premiums - they won't go up 5 to 8 per cent a year as they did under Labor."
The opposition called for the government to reject a big rise in premiums, saying it could not be justified when the funds had already received up to $2 billion of taxpayers' funds.