Australia's private health funds say they will return any 'abnormal' coronavirus profits to members
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Version 0 of 1. Funds commit to give back monies from ‘cancellation of elective surgery and some allied health services’ Private health companies whose profits have been boosted by the Covid-19-caused downturn in health claims have committed to returning that money to customers, as consumer groups argue that premiums should be reduced during the pandemic. The chief executive of peak body Private Healthcare Australia, Dr Rachel David, has said health funds were going to extraordinary lengths to offer financial relief to their members. “Health funds have given a commitment that any funds resulting from the cancellation of elective surgery and some allied health services will be returned to members.” Consumer group Choice has argued that health insurers should stop charging for benefits that are not available during the pandemic shutdown and reduce their premiums by at least half. Modelling by the Australia Institute argues hospital insurance benefits may be reduced by between 50% and 70% and extras claims by 10% to 30%. Roy Harvey and Rod Campbell argue in the institute’s modelling: “Commonwealth and state use of private hospitals during the coronavirus pandemic, combined with social distancing measures, could cut benefit payments to people insured by Australia’s private health insurers by 30% to 50%, or $3.5bn to $5.5bn. Regulators should enforce a similar reduction in premium payments.” “From an ethical standpoint these savings should be returned to private health insurance policy holders, which would also assist with economic recovery post-crisis. Funds would still have very much the same reserves at the end of the crisis as they do now.” Any reductions in premiums to consumers could also save the federal government money – more than $1bn, Harvey and Campbell argue, by reducing its public health insurance rebate subsidy. The federal government cancelled all elective surgery in March to free up beds for Covid-19 patients, and to preserve limited personal protective equipment for health professionals. Some surgeries are set to resume next week, health minister Greg Hunt has announced, “using a staged and controlled process” balancing the ongoing need for Covid-19 capacity and a resumption of the most pressing elective surgeries. Procedures that are “low-risk and high-value”, patients at low risk of post-operative complications, as well as children who have been waiting for surgeries will be prioritised. Choice said the easing of surgery restrictions would still mean only about a quarter of the usual surgical load would proceed in hospitals. “This pandemic has highlighted many of the problems and inequities in the private health insurance and hospital systems,” Choice health insurance campaigner Dean Price said. “Surgeries have been cancelled and other services limited, and right now health funds are charging us for services we can’t use. “Until our health system is back to normal, people need relief from their health insurance premiums.” Private Healthcare Australia has said a number of measures were being considered to recompense members. “In the next couple of months, if it looks like abnormal profits are accumulating, we will work out how to distribute those profits back to members,” CEO Rachel David told the ABC. “That can be done in a number of ways, either by a cash rebate that is deposited in the member’s bank account, or by reducing the extras premium going forward, or by actually rolling over the benefit people would have got this year for next year.” Sheena Jack, the chief executive of the non-profit fund HCF has pledged to return any additional profits to members. “We will not be keeping any windfall gains that may accrue by a reduction in claims. “We are exploring how we help members now as well as how we can pass back any savings to them that accrue from reductions in claims due to Covid-19.” HBF, another non-profit fund, said it would similarly return additional money to members. “If the current situation continues for an extended time, we’ll certainly consider how we should use accumulated funds for the benefit of our members,” chief executive John Van Der Wielen said. And the managing director of Nib, Mark Fitzgibbon, has previously flagged rebates for members if the elective surgery shutdown temporarily boosts profits. “In the course of the sharp reduction of treatment of all types, we’ll see a sharp reduction in claims and likely an increase in profitability. And if we are going to experience abnormal profitability, how do we compensate our members?” he said. “The consensus at this stage is that a rebate mechanism may be appropriate, though I need to emphasise we haven’t made any decisions.” Private health funds have also postponed annual premium increases that were scheduled for 1 April. Choice has argued that structural inequalities within Australia’s healthcare system have been exposed by the stresses of the Covid-19 pandemic. It has argued that consumers could consider dropping hospital and extras cover during the Covid-19 pandemic. “People will again be questioning the value of this product, and they will continue to drop out of this market unless the government takes strong action to review and improve the system,” Price said. “The problems of cost and value are not new to this pandemic, even if they are different. The Australian government needs to commission a thorough, independent and public review of the private health insurance system.” Rachel David, from Private Healthcare Australia, said advice to cancel or downgrade private health cover was “utterly irresponsible”. “Those who are perpetuating propaganda about ‘cancelling’ private health insurance are doing a great disservice to the many Australians who will need their health cover now and in the future. Private health continues to play a significant and important role in performing and funding vital healthcare.” |