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nib response to Opposition Leader comments regarding PHI

Responding to comments made at the National Press Club today by Opposition Leader, Bill Shorten, nib Chief Executive Officer Mark Fitzgibbon says private health insurance (PHI) would welcome a constructive and bipartisan approach to future healthcare policy.

"The reality is our ageing Australian society is spending more on their healthcare and we need to find a way to pay for it other than taxes because increasingly into the future we'll have relatively fewer taxpayers for every retired person. We actually need a stronger private healthcare system and Government policy to support this," Mr Fitzgibbon said.

Mr Fitzgibbon said it was totally wrong to compare premium increases with CPI as CPI only accounts for increases in the cost of goods and services. CPI or cost inflation accounts for less than half of the growth in private health insurance premiums with the main factor being people are purchasing more and more medical treatment.

In financial year 2017 the number of hospital admissions paid by nib increased by 4% to 314,000 hospital episodes. These services would otherwise be funded by the already strained public hospital system or individuals themselves.

Mr Fitzgibbon explained that a key reason we have high out-of-pockets (about 17% of spending in Australia v 10% in the USA) is because PHI is restricted in what it can cover for people.

"It's an anachronism that we can't pay for doctors outside of a hospital. It confuses customers, leads to higher out-of-pocket expenses and actually encourages unwarranted hospitalisation. Allow PHI to expand cover and out-of-pockets will come down.

"That about 40% of policies have exclusions simply reflects consumers today having choice. For example, it would be crazy if someone aged 65 could only buy a policy that included obstetrics and orthodontics," Mr Fitzgibbon added.

Mr Fitzgibbon said the PHI industry would welcome discussing the issues raised by Mr Shorten and naturally shared his goals of affordability, effectiveness and fairness.

"While there's always room for improvement we think we've done reasonably well in recent years in keeping a lid on premium inflation against a backdrop of rising spending including now funding many public hospitals. If Mr Shorten has some additional ideas as to how we might further improve we're all ears," he said.