APHA calls "bulldust" on claims insurers cannot pay in full

In a statement on 8 April, the Australian Private Hospitals Association (APHA) cited a commitment by Australian Government Health Minister Mark Butler that a re-elected federal Labor Government will compel health insurance companies to pay private hospitals in full for the treatments and services they provide to insured patients — APHA stating that any claims by insurers that they cannot afford to pay private hospitals in full cannot be taken seriously.

“The insurers claim that paying in full will cost them $1 billion and they cannot afford it. No-one is falling for it. Australians’ bulldust barometers are well-tuned to see through the lame charade,” APHA CEO Brett Heffernan said. “This is the latest in a litany of falsehoods promulgated by insurers to protect their unbridled profiteering at the expense of patients, hospitals and their employees, and the entire healthcare system.”

Heffernan said it is well documented that over the last three years the Australian Prudential Regulation Authority (APRA) has exposed the health insurance industry in short-changing private hospitals by more than $3 billion, by failing to pay hospitals for the actual cost of treatments and care. “The insurers have been caught out on their claim that they cannot keep pace with the rising cost of health care, as APRA also reports that over the same period the insurers reaped record profits of over $5 billion. Indeed, averaging $2 billion each year in the last two years,” Heffernan said.

Heffernan also said that in 2023–24 insurers awarded themselves an 18% increase in ‘management fees’, which led to another $3.5 billion a year from the premiums Australians pay. “In truth, the insurers have been raking in cash hand-over-fist from hardworking Aussies doing the right thing in taking up private health insurance, despite the cost-of-living crisis,” Heffernan said. “Meanwhile, the insurers have been undermining the choice and access of insured patients and plunging hospitals — including public hospitals — into even more turmoil.”

Heffernan said that 20 private hospitals have consequently closed entirely and that more than 70 services in other hospitals have been permanently cancelled — including maternity and mental health units. “In another falsehood to obscure their rampant profit margins, in recent months, the health insurers have publicly stated that they are returning 88% (or 88 cents in the dollar) from premiums collected to their members in payments to private hospitals. In fact, APRA reveals the insurers have not met that annual benchmark since 2019–20. Today, it is between 83 and 84 cents in the dollar,” Heffernan said.

“Based on consecutive years of record profits, the health insurance industry in being forced to meet the 88 cents in the dollar threshold, would still be banking $1 billion in profit from annual premiums, as well as $3.5 billion in annual management fees,” Heffernan said. “It also follows that the insurers can absorb paying for treatments in full, which is their job and pact with insured patients, without increasing premiums. Their claim that premiums must go up is another falsehood.”

Returning to the cited commitment from Butler, Heffernan said: “Minister Butler is late to the party, but Labor seems to have now come to the realisation that allowing the health insurance industry to run amok and abuse its market dominance to short-change hospitals is not in the interests of patients or the complementary public–private healthcare mix.

“It is exactly what the APHA has been publicly calling for since November. Regardless of who forms government after May 3, private hospitals and their patients need a government committed to holding the health insurance industry to account,” Heffernan added. “Both sides of politics must accept the critical need to reform the funding mess that allows insurance companies to rake in unprecedented profits while dictating pricing in hospital treatments and care. Anything less will not stop more hospitals from shutting down services or, indeed, closing entirely.”

Image credit: iStock.com/Kubra Cavus