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Contribution rates for private health insurance policies will increase by an average of 7.96 % in 2005. The actual increase will vary from fund to fund and from product to product and between States. Depending on the fund and the policy, rates will change from April or May 2005. All funds applied for rate adjustments. These applications were required to be endorsed by an independent actuary. They have been closely scrutinised by PHIAC and the Department of Health and Ageing to ensure that they are the minimum justifiable in terms of the financial position of each fund. PHIAC also sought some additional advice from the Australian Government Actuary for some funds at the request of the Government. In financial year 2003-04, private health insurance paid total benefits of $7.630 billion, an increase of 8.2% over the previous year. The industry had an underwriting surplus of just $151 million. The overall surplus for the industry of $447 million was equivalent to about 6% of benefit payments and was mostly due to good returns on investments. The contribution rate changes are a result of considerable cost increases over the past year. Hospital benefits payments increased by 9.6%, marginally higher than growth in the previous year. Gap payments to doctors increased by 19.2% over the past year and benefits paid for prosthetics (such as cardiac pacemakers and joint replacements) increased by 18.7%. Ancillary costs increased by 3.4%. While this rate of growth is low compared the growth in hospital benefits, it is higher than the growth in ancillary costs in the previous year. Costs increases are due to a combination of increased charges and increased usage. Health fund costs also vary from state to state, which is why the prices of policies are different in each state. Generally, the entire industry is operating on very tight margins – 90 cents in every contribution dollar goes out again in benefits. Estimated benefits paid for contributors will exceed $8.4 billion in 2005-06. Increases in contribution rates are necessary to meet these increased benefits in a mainly not-for-profit market. The 30% rebate and the higher rebates for older Australians provide support in meeting the costs of contributions. Contributors will shortly receive letters from their fund identifying the rate changes affecting them. Contributors, who are unhappy with their health fund product, have considerable rights under the National Health Act. These include the right to transfer to another health fund without have to re-serve a waiting period provided that the new product they buy offers comparable cover. All health fund members should check that they have the right level of cover for them and shop around the health funds. A list of the health funds operating in each state can be obtained from PHIAC’s website at www.phiac.gov.au, and more information relating to rights of consumers can be obtained from the Private Health Insurance Ombudsman at www.phio.org.au.
About PHIACThe Private Health Insurance Administration Council (PHIAC) is an independent statutory authority that regulates the private health insurance industry. For more information please contact: Gayle Ginnane, PHIAC Chief Executive Officer (02) 6215 7999 or 0419 285 313. |
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Private Health Insurance Administration CouncilSuite 16, Level 1, 71 Leichhardt Street, KINGSTON ACT
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Last modified: 22 July, 2005 |