$2,000,000,000 Profit Shows Private Health Insurance Reform Needed To Tackle Cost-Of-Living Crisis
The Medical Technology Association of Australia (MTAA) has pointed to the record profits for insurance companies as another clear example of the need for private health insurance reform to address the cost-of-living crisis in Australia.
Quarterly data released by the Australian Prudential Regulation Authority (APRA) has revealed private health insurance companies have raked in their highest ever profits at $2 billion, an astounding 107.8% increase on last year.
The data also showed that the ‘deferred claims liability’ (unpaid premiums) insurance companies have been hoarding since the start of the pandemic also increased to $1.6 billion.
The record profits come while expenditure on medical devices, via the Prostheses List, plummeted by 17.9% in the March quarter compared to the previous quarter.
MTAA CEO, Ian Burgess, said the data shows the real and urgent need for reform to private health insurance which is adding a significant burden to Australia’s cost-of-living crisis.
“The fact that we’re seeing corporate health insurers now spending more on themselves through ‘management expenses’ than they are on life-saving medical devices, while also making record profits, shows we need to see urgent and real reform to private health insurance,” Mr Burgess said.
“The Prime Minister is right to focus on the cost-of-living crisis in Australia, and making private health insurance more accessible, affordable and fair is what’s needed right now to help working families.”
The APRA data shows that while working families are struggling to afford to put fuel in their cars or save for a home, private health insurers are splurging on themselves to the sum of $2.6 billion for ‘management expenses’, an increase of 7.3% on the previous year.
MTAA has put forward a ‘7 Point Plan’ to address the inequities of private health insurance, force insurers to payback what’s fair to consumers, and ensure the system puts patients and not profits at the heart of its focus.
MTAA’s ‘7 Point Plan’ recommends the government adopt the following:
- Force insurers to return 100% of COVID-19 profits to members,
- Require insurers to pay out a minimum of 90 percent of their revenue to members,
- Establish a Private Health System regulator to develop a reform agenda to increase sustainability and protect patients,
- Refuse premium increases for insurers whose claims ratio is below the industry average,
- Prevent insurers from providing rebates for unproven treatments,
- Standardise rebates for services across insurers to streamline administration and provide for certainty for consumers, and
- Hold an inquiry into the corporate and tax structures of insurers to identify opportunities to reduce management expenses.
“These reforms address the drivers of ongoing premium increases, supports the sustainability of Australia’s private health sector, and will stop private health insurance from driving Australia’s cost of living crisis. They will break the cycle of ongoing above-inflation premium increases and ensure the affordability of private health insurance for all Australians,” Mr Burgess said.