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Topics in this section Private Patients' Hospital Charter Insure? Not Sure? (pdf format) Operations Of The Private Health Insurers Annual Report Financial and Statistical tables of past Operations Annual Reports |
PublicationsOperations Of The Private Health Insurers Annual Report 2006-07Executive summaryIndustry resultsThe industry recorded a surplus of $1,288 million before tax and extraordinary items. Of this surplus, $616 million was derived from the core health insurance operation, a net margin of 5.6%. Health related business and investments contributed $672 million of the surplus. The benign investment environment of recent years cannot be expected to continue unabated. Insurers will need to carefully review, monitor and report on their investments given the historical reliance on investment returns to support industry performance. PremiumsIn 2006–07, total contribution income was $11,127 million, an increase of $867 million (8.4%) from 2005–06. Premiums increased by an average of 4.52% compared to 5.68% last year. BenefitsBenefits outlays continued to increase over the last year. The number of hospital days increased by 4.5% overall while there was an increase of 7.4% in the number of episodes over the previous year. Overall the funds paid out $6,687 million for hospital treatment and $2,393 million for general treatment. Total hospital and general treatment benefits increased by 8.6% over the previous year. Hospital treatment covers several different categories which have differing impacts on hospital benefits. The increases over the year were as follows:
The average age of contributors with private health insurance was 39.9 years in 2006–07 compared with 39.8 years in 2005–06. The average age of the private health insurance population is increasing at a rate similar to that of the Australian population. Persons aged 65 and above comprised 13.3% of the insured population, compared with 13.1% at 30 June 2006. This group drew 44.9% of benefit outlays over the last year. The increasing age of the insured population remains a significant trend of some importance to the industry. The Australian Government reforms for listed prostheses benefits outlays have shown some success. The increase of 10.8% in 2006–07 and 7.9% in 2005–06 is lower than the previous few years. PHIAC will continue to monitor this area. Medical gap cover provides a significant benefit to members, but remains a significant cost driver for health funds. The costs of benefits for services in excess of the Medicare Benefits Schedule Fee increased by 9.6%, or $86 million, over the last year. This increase is in excess of the growth in contribution rates and remains a significant cost driver for health funds. The proportion of services with no gap was stable at 82.7% during 2006–07 and 2005–06. MembershipHospital coverage increased by 298,634 persons during the year. Hospital coverage at 30 June 2007 was 43.5% of the population, with 9.1 million persons covered. Over the same period, general treatment (formerly ancillary) coverage also increased by approximately 360,000 persons. General treatment coverage at June 2007 was 46.4%, with 9.7 million persons covered. The figures at the end of June 2007 incorporate an artificial increase of approximately 650,000 due to definitional changes under the Private Health Insurance Act. Management expensesManagement expenses represent 9.6% of contribution income. PHIAC has been monitoring management expenses over several years and has noticed that there has been some decrease in management expenses for those funds with higher than average management expenses. However we would encourage funds to continue to seek appropriate efficiency measures for the benefit of their policy holders.
Risk equalisationAfter considerable debate over recent years, the new risk equalisation scheme (previously called reinsurance) was implemented on 1 April 2007. The new risk equalisation scheme is a combination of a modified version of the former reinsurance scheme accepted by the industry and a high cost claims component. Risk equalisation plays a major role in ensuring that community rating in private health insurance provides affordable coverage for those at high risk. PHIAC budgetPHIAC had an operating budget of $4.44 million for 2006–07. It has maintained this budget into the 2007–08 financial year. We are conscious of our responsibility to keep our costs to a minimum commensurate with meeting our legislated responsibilities.
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