Private health funds to reap $5 billion pandemic windfall
New research from The Australia Institute shows that Australia’s private health insurers are set to enjoy a windfall of between $3.5 billion and $5.5 billion over the next six months.
“The takeover of private hospitals by Governments, social distancing and other policies to counter corona virus mean that far fewer services will be provided to private health insurance policy holders,” said Roy Harvey, report author and health finance expert.
“Visits to dentists, physios, chiropractors and other services by policy holders will be significantly reduced as a result of social distancing rules and 'stay at home' advice to older Australians.
“This means that the payments that private health insurers would usually make to cover the services provided to their policy holders will not be needed.
“We estimate this will result in a saving to the private health insurers of between $3.5 and $5.5 billion, or up to 50% of their benefit payout.
“Every policy holder will pay, on average, $500 to $750 for services their insurers know they will not be able to use.
“The Productivity Commission should review this situation immediately and the Government should require funds to implement their findings.
“This review could take as little as two weeks - especially if Governments were willing to make good any loses that funds might incur due to quick implementation. The Productivity Commission and APRA should then monitor benefit payments on a monthly basis and adjust premium levels.
“The Commonwealth could also save $1 billion to $1.5 billion by a reducing Private Health Insurance Rebate payments,” Mr Harvey said.
“While insurance companies look set to gain billions, they show no signs of voluntarily returning this saving to their policy holders,” said Rod Campbell, report co-author and Research Director at The Australia Institute.
“Insurers claim to be supporting their members through the crisis by delaying premium increases, but they should be passing on these significant savings to households.
“If the Commonwealth does not ensure savings are passed on to customers, it will be one of the most egregious subsidies ever given to an industry already infamous for receiving handouts,” Mr Campbell said.