HEALTH insurers are getting more and more profitable, pocketing an extra $106 million in the past year — an increase of 10 per cent.
As policyholders brace for yet another budget-breaking premium increase of five per cent-plus, new official figures from the prudential regulator show funds’ collective net earnings rose to $1.19 billion in 2015 from $1.08 billion the year before.
The rate at which their profits are expanding sped up by 50 per cent, because the 2014 result was an increase of only $70 million.
This is due to a widening in their “gross margin” as premium revenue growth ($1.38 billion to $21.4 billion) outpaces the increase in payments to customers receiving treatments ($1.037 billion to $18.5 billion).
The surplus capital held by funds soared by $566 million or 11 per cent over the year. More than $300 million of that was squirrelled away in the last quarter of 2015.
Health Minister Sussan Ley has made much of the surplus capital position in seeking to pressure funds into lowering their premium increases in 2016.
Appreciate opportunity 2 spruik our world class health system & next gen of aussie innovators #AUSBW #medtech pic.twitter.com/iZzDXDlBph
— Sussan Ley (@sussanley) February 19, 2016
Already, it’s proving to much for many households. There was a slide in the proportion of people with cover in NSW, Victoria, Queensland, South Australia, Western Australia and the ACT. The Northern Territory had a small increase and Tasmania was flat.
The biggest decreases are among people in early 50s, who are dumping both hospitals and so-called “extras” cover for dental, optical and other general treatments.
The number of policies where holders have to fork out an excess or co-payment when treated in hospital jumped by 124,000 or 7.5 per cent, from 1.66 million to 1.79 million.
Ms Ley said the profit figures indicated some health insurers had “room to move” on premiums.
“This is precisely why I asked insurers for a rethink on submissions this year, which more accurately reflected their financial position and deliver a better deal for their customers,” Ms Ley said.
Consumers Health Forum CEO Leanne Wells said the gap between the premium revenue health funds receive and what they pay out in benefits was at an all time high of $3.1 billion.
“This is unacceptable particularly given that taxpayers already finance health insurance to the tune of $6 billion a year through the health insurance rebates,” Ms Wells said.
Insurer lobby group Private Healthcare Australia’s CEO Rachel David said last year’s average premium increase of 6.18 per cent was less than the 7.4 per cent rise in benefits paid by health funds during that period.