Govt provides disappointing response to Senate report on private health 

9 January 2019

Released just prior to Christmas, the Federal Government’s response to the Senate Inquiry into the value and affordability of private health insurance and out-of-pocket medical costs provides a disappointing response to addressing the pressing issues of value, affordability and discriminatory rebates. 

Claiming that last year’s premium increase of 3.25 per cent was low, the Federal Health Minister Greg Hunt has rewarded private health insurers with Government inaction while leaving consumers juggling rising costs and declining rebates. 

The ADA has confirmed how bad the situation is for consumers when it comes to private health premiums with its analysis finding that they have increased by almost 27 per cent over the five years to June 2018 compared to health inflation of 21 per cent and dental cost growth of 8 per cent. 

To put the issue even more clearly in perspective, over the same period, CPI grew by 1.9 per cent and overall health costs grew by 3.2 per cent – which is actually below the premium increase. 

Inaction on the issue of the declining value of rebates becomes even more problematic when you consider figures from the Australian Prudential Regulation Authority that reveal some ‘for profit’ health funds are generating returns on equity of over 30 per cent (by way of contrast, banks return around 12 percent). 

In response to the inequitable private health insurance status quo, which the Government shows no sign of meaningfully addressing (particularly when it comes to extras and discriminatory rebates), the ADA, along with CHOICE and other major health and consumer organisations, is supporting the Opposition’s call for a Productivity Commission Inquiry into private health insurance. 

The proposed Productivity Commission Inquiry, which would take place if Labor is elected to Government this year, would involve a root-and-branch review of the private health system, in addition to the imposition of a two percent cap on private health insurance premium rises for two years.