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June 2009

Quarterly Statistics

June 2009

Suggested citation: Private Health Insurance Administration Council, Quarterly Statistics June 2009, PHIAC, Canberra, 2009

Contents

Snapshot of the industry

Membership and coverage

  Hospital treatment

  General treatment

Benefits paid

  Hospital treatment

  General treatment

  Medical benefits

  Prostheses benefits

Service utilisation

Out-of-pocket payments

Financial information

  Financial performance

  Prudential position

Snapshot of the industry  

	Hospital treatment membership 44.6% at 30 June 2009 no per cent change over the quarter ↑  43,125 insured persons over the quarter   General treatment membership 51.3% at 30 June 2009 no per cent change over the quarter  ↑ 58,091 insured persons over the quarter
	Hospital treatment episodes ↑ 7.6% over the 12 months to June 2009 ↑ 0.7% over the quarter    General treatment services (ancillary) ↑ 5.7% over the 12 months to June 2009 ↑ 1.9% over the quarter
	Hospital treatment benefits ↑ 10.4% over the 12 months to June 2009 ↑ 4.9% over the quarter   General treatment benefits ↑ 8.5% over the 12 months to June 2009 ↑ 4.0% over the quarter
	Hospital treatment out-of-pocket $300.78   General treatment out-of-pocket $48.07
	Premium revenue ↑ 7.3%   Profit before tax ↓ 27.1%

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Membership and coverage

as at 30 June 2009 

Hospital treatment 

At 30 June 2009, 9,745,242 persons, or 44.6% of the population, were covered by Hospital Treatment cover. There was no change in the percentage of the population covered, compared to the March 2009 quarter.

There was an increase in coverage of 43,125 insured persons in the June 2009 quarter. There was an increase of 16,893 single policies and an increase of 15,810 family policies during the quarter. There was a net increase of 32,703 hospital policies. Over the year, from 30 June 2008, the number of insured persons with hospital treatment cover has increased by 211,263 persons and 117,376 policies.

There was a notable decrease in coverage during the quarter of 10,570 persons for people aged 20 to 24. The largest increase was 8,345 for people aged 30 to 34. The increases in the older age groups are partly due to ageing of the insured population with people moving from younger to older age cohorts.

Lifetime health cover 

The majority of adults with hospital cover (89.2%) have a certified age of entry of 30, with no penalty loading. However, the proportion of adults with hospital cover paying a loading has increased every quarter since the introduction of Lifetime Health Cover.

At the end of the June 2009 quarter, there were 756,204 persons with a certified age of entry of more than 30 and subject to Lifetime Health Cover loading; a net increase in persons paying a penalty over the year of 86,898. There was a net increase in persons with a certified age of entry of 30 (with no penalty) over the year of 71,329.

Net quarterly change in insured persons

Number of insured persons by age

Hospital treatment tables 

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General treatment 

At 30 June 2009, 11,198,744 persons or 51.3% of the population had some form of General Treatment cover. There was no change in the percentage of the population covered, compared to the March 2009 quarter.

There was an increase in coverage of 58,091 insured persons in the June 2009 quarter. There was an increase of 23,005 single policies and an increase of 19,988 family policies during the quarter. There was a net increase of 42,993 general treatment policies.

Over the year, to 30 June 2009, the number of insured persons with general treatment cover has increased by 551,847 persons and 286,229 policies.

The General Treatment (ancillary) by age charts and data in this reports show persons that have general treatment policies that cover ancillary services such as dental treatment, and excludes those General Treatment policies that do not cover ancillary treatment. The March 2009 quarter is the first quarter since March 2007 in which data is collected according to this definition. The aim of this change is to map the trend in ancillary coverage prior to 1 April 2007 to the current period.

There was an increase in coverage of 70,219 persons with General Treatment ancillary coverage in the June 2009 quarter. The largest increases in coverage of 8,845 persons, was for people in the 30–34 age cohort.

The 20 to 29 age group historically has a lower proportion of persons with general treatment insurance compared to other age groups. There was a decrease in coverage of 9,201 for persons with ancillary coverage in the 20–24 age cohort in the June 2009 quarter. 

Net quarterly change in insured persons (ancillary)

Number of insured persons by age (ancillary)

General treatment tables

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Benefits paid 

Hospital treatment   

Benefits per episode/service

During the June 2009 quarter, insurers paid $2,101 million in hospital treatment benefits. This was an increase of 2.2% compared to the March 2009 quarter. Hospital treatment benefits were comprised of:

• $1,461 million for hospitalservices such as accommodation andnursing
• $334 million for medical services
• $304 million for prostheses items.

Benefits paid for hospital treatment by age and gender (top chart) show the total benefits paid in each age group. The age group for which most hospital benefits are paid is between 60 and 79. The benefits per person (middle chart) are affected by the age of the person and the number of persons in each age group. The older age groups have a higher claiming rate. The rise in benefits in 20–39 age cohorts is due to increases in female benefits associated with child bearing.

Hospital treatment benefits per person during the year increased from $777.91 to $841.64. The largest amount of benefits per person was spent on hospital accommodation and nursing, followed by medical and prostheses benefits. 

Hospital treatment benefits paid by age 12 months to 30 June 2009

Hospital treatment benefits per person and percentage of benefits paid by age cohort 

Hospital treatment benefits per person

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General treatment  

During the June 2009 quarter, insurers paid $736 million in general treatment (ancillary) benefits. This was an increase of 0.6% compared to the March 2009 quarter. Ancillary benefits for the June quarter included the major categories of:

• Dental $379 million
• Optical $115 million
• Physiotherapy $59 million
• Chiropractic $ 54 million.

There is a marked difference between the distribution of benefits over age groups between hospital benefits and ancillary benefits. The major difference is the higher claiming rate in older age groups for hospital benefits while benefits per person for ancillary benefits are more evenly spread over the age groups.

General treatment ancillary benefits per person during the year to June 2009 were $285.60, increasing from $245.60 in the year to June 2008. The largest component of ancillary benefits is dental for which $146.93 was paid per person during the year to June 2009. 

General treatment benefits paid by age 12 months to 30 June 2009 (ancillary)

General treatment benefits per person and percentage of benefits paid by age cohort (ancillary)

General Treatment benefits per person (ancillary)

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Medical Benefits 

Total benefits for medical services increased 5.7% during the quarter and the number of medical services in the quarter increased by 3.8%. Benefits paid on average for the medical services increased 1.8% per service during the quarter.

The increase in medical benefits per service was calculated over a range of medical services and does not mean medical services overall increased in cost. The increase in benefits paid may reflect a change in the type of medical services utilised, or a change in the overall utilisation of medical services. The medical service for which the greatest amount of benefits was paid was anaesthetics, comprising 24% of all medical benefits and totalling $80.364 million.

Medical benefits paid by speciality group

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Prostheses benefits 

Benefits paid for prostheses decreased 0.8% per prosthetic item during the quarter. Similar to medical services, the increase in benefits paid for prostheses was calculated over a range of prosthetics (see chart) and does not mean prostheses overall increased in cost. The increase in benefits paid may reflect a change in the type of prosthetics utilized, or a change in the overall utilisation of prosthetics. The prosthetic groups for which the greatest amount of benefits were paid were "hips" and "knees", comprising 15% each of all prosthetics and totalling close to $45 million each. The combined cardiac group comprised 24% of all prosthetics and totalled $72 million over the quarter.

Benefits paid for prostheses

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Service utilisation 

During the June 2009 quarter, insurers paid benefits for 2.054 million days in hospital, arising from 773,704 hospital episodes of care.

The average length of stay was 2.65 days; a decrease of 4.1% compared to the March 2009 quarter. The utilisation rates for hospital episodes, medical services and prostheses services increased during the quarter, continuing the general trend.

Hospital utilisation is distributed over four categories of hospital: public, private, day only facilities and hospital substitute. During the June 2009 quarter hospital episodes were distributed as follows: 

• public hospitals 110,931 episodes
• private hospitals 549,837 episodes
• day hospital facilities 108,913 episodes
• hospital-substitute 4,023 episodes.

Between the March 2009 and June 2009 quarters hospital utilisation increased in all categories of hospital. These increases continue the trend with increases in utilisation in all categories over the year from June 2008 to June 2009. 

Day-only episodes in the four categories of hospital totaled 482,343, an increase of 5.8% compared with the March 2009 quarter.

Hospital treatment services per 1,000 insured persons

General treatment services per 1,000 insured persons

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Out-of-pocket payments 

The average out of pocket (gap) payment for a hospital episode was $300.78 in the June 2009 quarter and included out-of-pocket payments for medical services and some prostheses as well as any excess or co-payment amounts relating to hospital accommodation. The out of pocket payments for hospital episodes decreased by 2.5% compared to the same quarter of the previous year.

Out of pocket payments for medical services were $145.44 where an out of pocket payment was payable. The amount of gap for medical services varies depending on the specialty group. The specialty group with the largest out of pocket payment was plastic/reconstructive with an average gap of $326.37, followed by orthopaedic with an average gap per service of $267.15, followed by neurosurgical and then urology. Plastic/reconstructive medical services incurred the largest gap as a percent of the fee followed by "ear, nose and throat", neurosurgical and urology. The state with the highest amount of gap payment where gap was paid was New South Wales.

Medical benefits and out-of-pocket by speciality group

Proportion of services and average out-of-pocket payments

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Financial information

Financial performance 

*June 2009 figures are unaudited

Data relating to the industry’s performance for the 12 months to 30 June 2009 have been compiled by aggregating the last four quarters of unaudited data submitted by private health insurers.

For comparative purposes, the figures for the 12 months to 30 June 2008 contain audited data for that financial year.

Total benefits paid including state ambulance levies over the 12 months to June 2009 increased by $996 million from the previous 12 months. However, premium revenue had increased by only $887 million. With benefits increasing at a faster rate than premium revenue, the gross margin was weaker—down from 14.8% to 13.0%.

Management expenses of $1,276 million was almost identical to the preceding 12 months. Overall, a net margin of 3.2% and profit after tax of $313 million were recorded by the industry for the 12 months to June 2009, down from 4.3% and $498 million when compared to the 2008 financial year.

The impact of the global financial crisis has negatively affected investment revenue with a loss of $85 million from investment activities. However, of significance is that investment revenue has returned to positive territory. The reallocation of assets into more conservative investment types by insurers over the past few quarters, coupled with greater stability in asset value and improvements in economic conditions, have resulted in investment revenue of $121 million for the quarter. In the March and December quarters the industry recorded investment losses of $7 million and $201 million respectively.

Whilst there has been some recovery in revenues from investments, PHIAC remains cautious about future economic circumstances affecting asset values and returns.

With ongoing increases in utilisation and costs in the industry and considering a number of policy changes in train or mooted, PHIAC emphasizes the importance of prudent investment management and continued sound underwriting performance.

Health benefits fund profit after tax breakdown for 12 months to 30 June 2009

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Prudential position 

*June 2009 figures are unaudited

**includes health insurance equipment and other assets

Total assets reduced by $432 million over the 12 months to June 2009. An increase of $719 million was reported for subsidiary and associated entities, and was primarily related to mergers and acquisitions within the industry. This was partially offset by a decrease of $610 million in bonds and other fixed interests securities. Property was impacted by current market conditions and lost $86 million.

By contrast, liabilities rose over the same period by $288 million, the majority of which was caused by an increase in unearned premium liabilities, as well as unpresented and outstanding claims liabilities.

The industry as a whole remains in a sound capital position with excess assets for solvency purposes of $3,026 million against a requirement of $5,723 million.

Health benefits fund assets vs liabilities as at 30 June 2009