On Friday I spoke with a Medibank customer of more than 40 years. Margaret had her knee surgery cancelled three times because of government restrictions on elective surgery in April. Her surgery has since gone ahead but she is one of countless Australians who have felt the impacts of a health system that has had to adapt quickly to COVID-19.
2020 has been a tough year for everyone and it doesn’t look like it will get easier any time soon. It’s not just patients who have felt this. Australia’s healthcare workers, one of which is my own son, go to work every day as part of the frontline response to this pandemic.
I’m the chief executive of Medibank and I see the impact this is having on our 3.7 million customers and the health teams across our business. I also see the impact on healthcare providers. Hospitals, dentists, physios and their frontline people – to name just a few – have all felt the pain of COVID-19.
Private health insurers are a critical part of Australia’s world-renowned mixed public and private health system. It’s in Australia’s best interest that private health care continues to have a pivotal role in the response to COVID-19.
We determined right from the beginning that our customers would not be financially disadvantaged by the changes that have had to happen. And that’s why the industry immediately postponed premium increases for six months and has now returned more than half a billion dollars in savings to our customers.
Any suggestion of a billion-dollar industry windfall from the six-week shutdown ignores not only this, but also what happened to claims during and since this time.
It is true we saw a decrease in claims over the six weeks, particularly in extras. Hospital claims also fell, although many elective surgeries were unaffected by the government’s restrictions. In total, claims were around 50% of normal levels.
But since then, claims have bounced back to normal or above-normal levels. The industry regulator APRA recognises this ‘catch up’ and has told insurers to expect the majority – if not all – of surgeries and extras services disrupted through COVID-19 to ultimately take place.
These same claims will be subject to the health inflation we see year after year. The latest CPI data shows this tracking at 2.9%, which makes the gap between ‘premiums in’ and ‘claims out’ as lean as it ever was.
What we’re seeing now in Victoria is that the situation is fluid. If it turns out there are more savings, we will return these to customers. Our promise to not benefit financially from the pandemic is on the public record and we aren’t about to walk away from this.
On top of postponing premiums, we have chosen to support our customers and community in additional ways. This ranges from a hardship program to help customers doing it tough – including a 50% premium discount for those doing it hardest – and a $5 million donation to Beyond Blue. In all, our response exceeds $180 million so far.
Australians are living with enormous uncertainty and health is more important than ever. Medibank stands with our customers and community and we will continue to support the public health response like we have from the start.
My family has private health insurance for the same reason as more than 13.6 million Australians – it gives us peace of mind and choice. We know affordability is a huge concern in this uncertain time – and that’s why we will stick by our promise to return any savings straight back to the people who matter most: our customers.
This piece was published as an opinion editorial over the weekend.
