Rising benefit outlays have forced Australia's largest health fund, Medibank Private, to increase its premiums by an average of 8.95 per cent, effective from 5 April 2004.
Following regulatory approval for the pricing changes, the weekly increases across Medibank Private products for single members (after deducting the Federal Government's 30% Private Health Insurance Rebate) range as follows:
NSW / ACT
VIC
QLD
SA
TAS
WA
NT
$0 - $2.56
$0 -$3.01
$0 - $2.55
$0 - $2.63
$0 - $2.42
$0 - $2.24
$0 - $1.65
(Note: Prices double for Couple and Family memberships)Medibank Private Managing Director George Savvides said that the premium increases have been kept to the minimum needed to pay the increased benefit outlays claimed by its members.
"As a not-for-profit health fund, we only apply for premium increases where they are needed to cover the increasing cost of paying the health bills of our members," Mr Savvides said.
"For instance, in the four months to October 2003, we have seen benefits increase by 11% per member, compared with the same period for the previous year.
"Our benefit increases comprise both volume growth of member claiming and the unit cost of the services levied by hospitals, medical and ancillary providers. For instance, last year the average overnight hospital benefit paid per episode by Medibank Private was $4,725, whilst we paid dental claims totalling $264 million and funded over 14,000 knee procedures at $67 million.
"In the previous financial year our fund paid out a record figure of over $2 billion in benefits ($2,054 million) on behalf of our members. That came from funding 14 million claims, including some 530,000 individual hospital episodes.
"While no-one likes to see prices rise, I think that most people understand that health funds have little choice but to set premiums at a level that reflects the increasing cost of providing quality health care and the increasing utilisation from factors such as new technology and the progressive ageing profile of our community.
"Medibank Private still returns over 90 cents in each dollar of premium income in benefit payments on behalf of our members."
Mr Savvides said that Medibank Private had consistently sought to deliver value to its members and to keep premiums amongst the lowest in the industry.
"Since 1998, Medibank Private's average premium increases have been cumulatively eight per cent below the increases experienced by other private health funds," Mr Savvides said.
"Australians enjoy a world-class mixed health care system that provides access to the latest medical treatments, drugs and health appliances. However, the cost of keeping pace with the latest health care treatments continues to rise."
Mr Savvides said Medibank Private had continued to work on reducing its operating costs, which were now below 9 per cent of total contributions, and well below industry average. The fund had reduced its management expense ratio from 14 per cent since 2000.
"Like most health funds, Medibank Private is a not-for-profit organisation that keeps a very tight rein on management costs," Mr Savvides said
"In fact, Medibank Private's current management expense ratio at under 9 per cent is well below that of many general insurers."
In April, Medibank Private will launch a new cover option, "Families with Adult Children", which gives parents the opportunity of keeping their adult children on their family cover until the age of 25 - an extension of age by four years from existing arrangements.
The cover 'option' will be available on all currently marketed Medibank Private products catering for family and single parent memberships.
"In a sign of the times, we have recognised that children are increasingly supported by their parents until well into their twenties, so it made sense to give parents the choice to keep their children on their family cover for longer", Mr Savvides said.
"The option enhances the affordability and value of private health insurance to young adults who might otherwise not remain privately covered."
Medibank Private's new premiums will come into effect from 5 April 2004, with members receiving letters in the fortnight beginning 15 March. As well as advising of the members' new premiums, the letters will also outline a number of product changes and improvements.
Members will be advised of a review of Medibank Private's preferred ancillary provider network, which will allow members to continue to access a range of services.
"From time to time, we look at our product structures and benefit items to ensure that we are using our members' premiums in a way that delivers maximum value," Mr Savvides said.
Summary by State of premium changes for popular Medibank Private products(Note: Prices are for Single member per week AFTER 30% Rebate deduction. Prices double for Couple and Family Memberships).
State
Product Title - Medibank Private popular products
Current Single Price per week (after 30%rebate)
Increase per week
New Single Price per week (after 30% rebate)
NSW
AdvantagePlus
$20.19
$2.00
$22.19
SmartPlus
$15.12
$1.50
$16.62
Blue Ribbon Hospital
$15.08
$1.51
$16.59
Super Extras
$6.05
$0.60
$6.65
First Choice Extras
$3.22
Nil
$3.22
WA
AdvantagePlus
$18.41
$1.82
$20.23
Blue Ribbon Hospital
$13.86
$1.36
$15.22
Blue Ribbon Hospital E1
$11.79
$1.16
$12.95
Super Extras
$5.00
$0.49
$5.49
First Choice Extras
$2.80
Nil
$2.80
TAS
AdvantagePlus
$17.92
$1.78
$19.70
Blue Ribbon Hospital
$17.57
$1.75
$19.32
First Choice Hospital E1
$10.88
$1.09
$11.97
Super Extras
$3.88
$0.39
$4.27
First Choice Extras
$2.66
Nil
$2.66
VIC
AdvantagePlus
$24.36
$2.41
$26.77
Blue Ribbon Hospital
$19.53
$1.92
$21.45
Smart Choice Hospital
$14.03
$1.37
$15.40
Super Extras
$5.04
$0.49
$5.53
First Choice Extras
$2.62
Nil
$2.62
SA
AdvantagePlus
$19.98
$2.00
$21.98
Blue Ribbon Hospital
$17.04
$1.68
$18.72
Blue Ribbon Hospital E1
$14.42
$1.43
$15.85
Super Extras
$5.11
$0.49
$5.60
First Choice Extras
$3.08
Nil
$3.08
NT
AdvantagePlus
$13.86
$1.36
$15.22
Blue Ribbon Hospital
$9.38
$0.91
$10.29
Blue Ribbon Hospital E1
$7.52
$0.74
$8.26
Super Extras
$3.99
$0.38
$4.37
First Choice Extras
$2.70
Nil
$2.70
QLD
AdvantagePlus
$20.37
$2.03
$22.40
SmartPlus
$15.19
$1.50
$16.69
Blue Ribbon Hospital
$16.66
$1.61
$18.27
Super Extras
$5.49
$0.53
$6.02
First Choice Extras
$2.90
Nil
$2.90