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Insurers back health insurance reforms

Trevor Chappell  |  13 Oct 2017Text size  Decrease  Increase  |  
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MELBOURNE - [AAP] Health insurers Medibank Private (ASX: MPL) and NIB Holdings (ASX: NHF) have backed federal government health insurance reforms and say they will pass on the savings generated by the reforms to customers.

Medibank Private and NIB welcomed changes announced by Federal Health Minister Greg Hunt on Friday that include allowing insurers to discount hospital insurance premiums for 18 to 29-year-olds by up to 10 per cent.

The measures also include incentives for young people to take up insurance, lower prostheses prices and measures to make mental health services more accessible and affordable.

Medibank CEO Craig Drummond says the affordability of health insurance is a key concern for customers.

"This reform package is essential to keeping premiums affordable for our customers, with Medibank committing to return every dollar of these savings to customers," Mr Drummond said in a statement on Friday.

"In an environment where the cost of healthcare continues to rise, reforms like this are paramount to addressing the issue of affordability."

NIB chief executive Mark Fitzgibbon said lower prices for medical devices--such as artificial hips and knees or pacemakers--and the discounts in premiums for young people were particularly welcome.

Mr Fitzgibbon said NIB and other insurers had made "ironclad" undertakings to the federal government to pass on reduced medical device prices to policyholders.

Mr Fitzgibbon said patients in private hospitals had been paying up to five times the cost of medical devices compared to what public hospital patients paid for the same device - a situation that Mr Fitzgibbon described as "bordering on scandal".

He said easily the most effective way to keep premium increases low is to attract more young people into private health insurance.

"That's simply because it lowers the average claim cost," he said.

Shares in the listed health insurers rose on Friday, with Medibank Private 7 cents, or 2.3 per cent, higher at $3.11 at 1306 AEDT and NIB up 5 cents, or 0.8 per cent, at $6.06.

Under the reforms announced, the discount on policy premiums for young people will phase out after they turn 40.

Also, policyholders who do not have full cover for mental health treatment will be able to upgrade their cover and access mental health services without a waiting period on a once-off basis.

The Medical Technology Association of Australia has agreed to lower the price of implanted medical devices from February 1, 2018, which is expected to result in lower insurance premiums.

Furthermore, the maximum excess will be raised, allowing some policyholders to select a higher excess in exchange for a lower premium.

 

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