How health fund premiums have outstripped what consumers get back in benefits

The latest rise in out of pocket costs that private patients pay is yet more evidence of the need for serious reform in health insurance, the Consumers Health Forum says.

The chart below, based on Australian Prudential Regulation Authority figures, highlights the graphic rise in the private health insurance (PHI) revenue-benefit gap. The red line shows the difference between what health fund members have paid in premiums and what they get back in benefit payments.


A chart that shows the widening gap between the health insurance industry's revenues and paid benefits, by year.
Caption Text: 
Chart by CHF, based on data from the Australian Prudential Regulation Authority

“Patients paid an average 4.4 per cent rise per episode for hospital treatment last year compared to the year before,’’ the Chief Executive Officer of CHF, Leanne Wells, said.

“That out of pocket impost was on top of heavy health insurance premium rises borne by consumers and at a time when some health funds are shrinking what they will cover.

“The APRA statistics in recent years show that the gap between the premium revenue health funds receive and what they pay out in benefits has risen significantly and reached an all time high of $3.1 billion in surplus revenue to the funds as at December last year.

“This is unacceptable particularly given that taxpayers already finance health insurance to the tune of $6 billion a year through the health insurance rebates.

“This is why the Consumers Health Forum has proposed the MyCover plan which would drive more competition and transparency in the industry by requiring that only health fund policies meeting set standards of comprehensiveness and comparability qualify for the health insurance rebate,” Ms Wells said.


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