Statement from PHA Chief Executive Dr Rachel David on Private Health Fund Premiums

Private Health Funds take the issue of premium increases very seriously, and do not take the decision to increase premiums lightly. The affordability of premiums for members is critical for the ongoing viability of private health. It is very important health funds hold sufficient funds to pay out on claims made by members, now and in the future. Health costs from all sources are rising at rates above inflation, which is a problem for both the public and private health sectors. Months of detailed research and analysis goes in to setting premiums at a level which ensures members’ care can be funded if and when it is needed. While no one likes to see costs go up, most people accept a reasonable increase as necessary to ensure they can continue to access the private healthcare system. Last year’s average premium increase of 6.18% was less than the 7.4% increase in benefits paid by health funds over the past year. This shows that the industry is working hard to keep premiums as low as possible, by introducing efficiencies into their own operations. During 2014-15, private health insurance paid a total of $17.96 billion in benefits paid on behalf of private health insurance members, including:

• $13.32 billion in hospital treatment – up 7.6 % on the previous year
• $4.55 billion in general treatment – up 6.3% on the previous year
• $1.89 billion in payments for prostheses – up 8.9% on the previous year; and
• $2.1 billion payments for medical specialists – up 7.1 % on the previous year.

The costs of healthcare in Australia are increasing across the board as a result of our ageing population, growth in chronic disease, advances in medical technology and higher charges by healthcare providers. The Minister is right to express concern about the impact of rising health costs on the consumer. All participants in the health system, public and private must work together to ensure sustainability of our health system. Health Funds are prepared to work with Government towards the goal of affordable health care, but there are no short term fixes, and this must be done with appropriate consultation and from an accurate fact base. Media contact: Jen Eddy 0439 240 755