She said the trend was “not sustainable” and that government intervention was needed.
Australian health funds made an average net profit margin of 4.2 per cent in the three months to September – 19 per cent lower than the same period a year earlier, when the average net margin was 5.2 per cent – the latest data from the Australian Prudential Regulation Authority shows
Mr Hunt hit back, saying the government was “on the side of the consumer” and was “working hard to deliver the lowest private health insurance premium changes in 19 years”.
“Private health insurance is an essential and valuable part of the health system and our government is committed to improving value and affordability for all Australians,” he said.
Health regulations require the minister to approve insurers’ proposed premium increases unless satisfied that they are “contrary to the public interest”.
Dr David said health funds were not making “big profits”, with lower margins than other categories of insurance due to the fact they paid out 80 per cent of premium revenue in claims.
Mr Hunt said the government had already implemented “the most comprehensive reforms to private health insurance in over a decade” with changes including new gold, silver, bronze policies and discounts for young people, introduced this year, making it “simpler and more affordable”.
He is consulting on further changes to help lower insurer costs, including a review of how medical device manufacturers market and sell products such as surgical glues, sponges and prostheses in private hospitals, after insurers blamed their sales tactics for a failure to deliver $250 million in promised savings despite a 2017 agreement to lower prices.
The minister is also considering including allowing health funds to pay for medical services to be delivered outside of hospitals at a lower cost.
Dr David said these changes were not expected to be delivered in time to impact on health funds’ costs for next year, saying insurers had to base their premium increases on projections based on current costs.