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Responding to Tuesday’s release of the Australian Prudential Regulation Authority’s Private Health Insurance Quarterly Statistics, the Australian Dental Association (ADA) calls on the Health Minister to urgently tackle the issues of poor value of ancillary cover, low rebates and inequities.

“While dental rebates represent more than 50% of those paid under General Treatment cover, their low levels mean policy holders would be better off saving their money and paying for dental care only when they need it,” stated ADA President Dr Carmelo Bonanno.

“The ADA has repeatedly shown that health insurance rebates back to consumers are not even keeping up with CPI – but their insurer’s profits continued to grow. The annual premiums for the last five years have been increasing at two to three times CPI.

“Last year we analysed the return on equity of the big for-profit health funds. Despite the number of policy holders dropping, their profits are not – so it’s definitely not consumers who are benefitting.”

The ADA’s analysis of the APRA report shows that returns for health insurers are high compared to most other companies across a range of sectors. The industry-wide data shows a return on equity of 16.6% – higher than even the major banks who average around 12%1.

“These returns are being driven by the big three ‘for-profit’ health funds with the APRA data showing returns of 30.6% for Medibank Private, 35.8% for NIB and 63% for BUPA,” said Dr Bonanno.

Figure 1: Health fund ROE summary

1 For the year ended 30 September 2018: ANZ = 12%; NAB = 11.4%; and Westpac = 12.9%. Source: Wall Street Journal https://quotes.wsj.com. Data Source: APRA Operations of Private Health Insurers Annual Report 2017-18′

“Many consumers believe that having General Treatment cover will give them choice of provider but in reality, some health funds are penalising their policy holders by providing lower rebates unless they see their contracted providers.

“The ADA thinks this is discrimination. That’s why we’re asking consumers while at their dentist, to sign our petition calling on the government to bring an end to discriminatory rebates under contracted provider schemes.”

Last year the ADA released a report outlining a model which could replace health insurance for general treatment in the primary care setting, similar to the model that exists in Singapore. The report ‘Saving For One’s Care’ demonstrates how putting money into a savings account could work equally as well for many consumers.

“The private health insurance system in Australia is in a fragile state right now. Serious efforts must be made without delay by the Coalition Government to undertake true consultation with those who work in the system and understand the problems, to find permanent solutions to stem the consumer exodus.”

ADA Report ‘Saving For One’s Care’ found here.