Medibank Private rates are to rise for the first time in 34 months
Premiums will increase an average of 8.94 per cent from 15 April.
Despite the rise, Medibank Private will still be the affordable, value-for-money private health insurance fund. Based on data from the government private health insurance regulator, PHIAC, Medibank Private pays an average 7 per cent more of its contribution income in benefits than its competitors
"We are pleased we have been able to contain our premiums for nearly three years," said Medibank Private managing director, Mark Burrowes.
"Nobody likes to increase their prices but it is a fact of life that treatment costs are increasing at a greater rate than inflation. Our premiums have to be at a level which ensures we can pay the record numbers of hospital, medical and ancillary claims our members are making."
Medibank Private's top nine claims in 2001 ranged between $258,561 and $78,608. On a state-by-state basis, the top payout in Victoria was $218,398; NSW, 258,561; Queensland, $112,937; SA, $113,614; WA, $72,072; and Tasmania, $66,937.
Medibank Private will be writing to each of its members individually to advise them of their new rates over the next few weeks. The fund suggests its members wait for this advice before making personal inquiries.
Medibank Private
Medibank Private is the country's largest private health insurer with almost three million Australians covered (or over three million persons covered when overseas members are included) and an over 30 per cent share of the private health insurance market.
The fund was established as a private health insurance fund in 1976 and on
1 May 1998 was incorporated as a public company, wholly owned by the Commonwealth and operating as a Government Business Enterprise (GBE).
Medibank Private is a not-for-profit private health insurer registered under the National Health Act 1953.
Currently, Medibank Private provides private health insurance for hospital, ancillary and ambulance services to Australians, overseas visitors and overseas students.
Medibank Private is the country's only truly national fund, being a significant player in state and territory markets.
Premium increase history
Medibank Private has not increased its premiums for three years, the last increase being in June,1999, when the premiums increased by an average of 1.84 per cent.
March 2001Zero increase March 2000Zero increase June 1999Average 1.9 per cent increase June 1998Average 7.1 per cent increaseOctober 1997Average 11.2 per cent increaseDecember 1996Average 10.3 per cent increase
Details of increase
While Medibank Private's average increase is 8.9 per cent, increases across the fund's policies will range between zero and 16 per cent.
As many as 60 per cent of members will have an increase of 9 per cent or less while 40 per cent will have increases in excess of 9 per cent.
Those receiving increases of 9 per cent and more are primarily:- Corporate customers. Medibank Private must comply with regulatory requirements regarding discounts. It must also ensure that members are paying the right premium for their state of residence.
- People on products that have experienced higher than expected claiming patterns. These patterns have been exacerbated by many members switching to the products in recent years.
Reasons for 2002 increase- As a not-for-profit, Medibank Private has traditionally paid out between 83-86 per cent of contributions as benefits. However, in recent months this figure has gone up to 96 per cent.
- This has resulted from an escalation in claims from existing members as well as from new members came in under Lifetime Health Cover had to sit out waiting periods but can now claim.
- People are using their private health insurance more because it is more attractive thanks to the reduction and elimination of out of pocket expenses.
- Currently over 70 per cent of in-hospital medical services for Medibank Private members no longer have gaps and 36 per cent of ancillary claims now have either a no or known gaps.
- New less invasive medical technologies are resulting in an increase in procedures, with same-day procedures up by 40 per cent and overnight hospital stays by 16 per cent (comparing the July-Sept 2001 quarter with the same period a year before)
- Comparing the same period, other increases include:
- hip replacements by 20 per cent,
- prosthetics by 13 per cent,
- and knee reconstructions by 10 per cent.
- Medical costs have risen dramatically since Medibank Private's last premium increase 34 months ago. These have been driven by an increase in medical indemnity insurance, costs of technology, higher award wages, and higher costs associated with caring for an ageing population.
- In the past Medibank Private has met shortfalls between contributions received and benefits paid out with investment income. However, declining global markets coupled with the events of September 11, has left Medibank Private without this buffer.
- New Capital Adequacy provisions require a greater level of reserves, particularly where product margins are lower.
Top Five Claims 2001 National Vic NSW Qld SA WA Tas $258,561$218,398$258,561$112,937$113,614$72,072$66,937$218,398$142,235$ 81,163$ 96,397$ 74,368$50,094$62,993$142,406$ 98,424$ 73,269$ 79,824$ 67,754$46,973$58,341 $113,542$ 71,108$ 67,442$ 78,606$ 66,715$46,181$47,231 $ 98,424$ 64,352$ 66,459$ 73,854$ 60,888$41,653$46,581
Medibank Private remains competitive
Despite the latest 8.9 per cent average increase in premiums, Medibank Private continues to be a value for money private health insurer.
Traditionally the fund pays out between 83-86 per cent of contributions in the form of benefits and currently this figure is at 96 per cent.