But the MTAA says the $3bn the funds pay themselves in management expenses might be a bigger worry.
A 12% increase in the number of health-insurer funded medical devices drove the 10.2% increase in benefits paid out by health funds in 2023, says the CEO of Private Healthcare Australia.
Australian health insurers paid a record $23.6 billion in benefits in 2023, a 10.2% increase over the previous year, according to new data released by the Australian Prudential Regulatory Authority.
APRA’s quarterly stats showed health funds paid $17.3 billion in hospital benefits, up 11.1% on 2022, an increase of $1.73 billion. Extras benefits paid for members totalled $6.16 billion, up 7.6% on 2022, or an additional $435 million. Hospital services totalled 4.92 million, up 9.2% on 2022, representing an additional 414,000 hospital episodes. Extras services also hit a record high of $102.4 million for services including dental, optical and physiotherapy, up 6.4% on 2022.
But Dr Rachel David, CEO of PHA, said the numbers showed the inflated price of generic medical implants and surgical supplies “continues to be a challenge”.
“It remains a major factor pushing up costs for heath funds and impacting premium affordability,” she said.
“Furthermore, the number of medical device claims per surgical procedure is continuing to grow disproportionately as a consequence of the sales and marketing activities of the multinational suppliers of these items.
“Health funds paid a record $2.36 billion in medical device benefits in the 12 months to December 2023.
“A four-year analysis of APRA data shows the number of medical devices funded by health insurers since the start of the covid pandemic has surged by 12%.
“This is totally out of proportion to the 2% increase in medical services and the 4.7% increase in hospital episodes over the four years to December 2023. There is no change in clinical practice that adequately explains this rate of growth.
“Australians are paying the highest prices in the world for medical devices – 30-100% more than comparable countries.”
Ian Burgess, CEO of the Medical Technology Association of Australia, said the APRA data showed the medical technology industry was “continuing to deliver significant savings to health insurers, which now total an estimated $2.4 billion since 2017”.
“Corporate health insurers continue to rake in record profits during a cost-of-living crisis and are paying out less and less to their customers,” Mr Burgess said.
“The proportion of premiums being returned to customers has fallen from 87% to 80% in the last four years. At the same time, the number of policies with exclusions has increased (two-thirds of all policies).
“The real cost pressure for corporate health insurers is the $3 billion they spend on themselves in management expenses.”
Dr David said health funds were “doing everything they can” to deliver value to members.
“We therefore need to double down on addressing affordability and stamping out waste,” she said.
PHA has called for policy measures to be introduced to “keep our health system sustainable”, including:
- Bringing the Australian prices of generic medical implants and surgical supplies back in line with global market prices;
- Introducing a Code of Conduct to monitor the sales and marketing activities of big surgical supply companies in Australia, to bring them in line with the pharmaceutical industry;
- Removing low value and harmful medical devices and services from the market as soon as the supporting clinical evidence becomes available;
- Allowing health funds to pay for evidence-based out-of-hospital care models provided by all health professional types, in addition to allied health professionals;
- Improving monitoring of out-of-pocket costs for specialist medical care to enable consumers and their GP to choose an affordable specialist if that is what they want;
- Introducing “surprise billing” legislation with penalties for failure to provide informed financial consent for private medical services.
