Who pays for what when it comes to your medical bills?
A simple guide on who's responsible for healthcare costs
Millions of Australians have received notice that their private health cover premium is increasing from 1 April, 2018 and the question on everyone's lips is 'why?'
At nib, we're all about transparency, so here are the main reasons why your premium has changed and what we’re doing to keep it as low as possible – without all the long-winded descriptions and corporate jargon.
1. The cost of healthcare is increasing
The first reason is all down to inflation, which is the sustained increase in the price of general goods and services. For example, that soy latte you bought for $3.75 in 2012 is probably selling for closer to $5.50 now, your electricity bill has gone up and the car insurance that once cost you $600 is now charging you $699.
It's not just you and nib affected by inflation, it's everyone from doctors and nurses to chiropractors and dietitians. Because health providers have to pay more money for things like medical equipment, medication and staff (as well as rent, electricity, etc.), they may need to increase the prices that they charge for their service.
To break things down into a real-life example; in financial year 2012, the average amount of benefits that nib paid per hospital episode was $2,247. By financial year 2017, this figure rose to $2,683, which is an increase of 19% in only five years. Therefore the amount we pay providers to keep you at your healthiest is constantly rising.
2. More people are claiming
Australia’s ageing population coupled with a rise in chronic conditions such as heart disease and diabetes means that more and more Australians are using healthcare services than ever before. With these trends set to continue, it means more pressure is put on the healthcare system, including claims made through private health insurance.
Throughout 2017, more customers than ever before turned to nib to make a claim and that's exactly why we are here – so you can access and afford the healthcare you need.
The total amount of benefits we paid out for financial year 2017 was a huge $1.4 billion. That’s a 5.4% increase from the previous year. The more benefits that we give back to customers, the more we have to charge to cover the costs; however, we know that sometimes little changes in lifestyle can mean big changes in health.
To help manage the increasing trend of expensive and serious surgeries like knee and hip operations, we offer Health Management Programs to our customers1 – helping them avoid invasive medical procedures - it really is a win-win for everyone!
3. Reduced Government contribution
For many Australians, the Federal Government helps to cover the cost of your health insurance premiums through the Australian Government Rebate on private health insurance (AGR); however, each year the contribution the Government makes to your premium is adjusted. From 1 April, the AGR will decrease which means if you are eligible for this rebate the Government will contribute less to your overall premiums and that means you'll be contributing more.
It is difficult to predict any future premium increases, as this is largely dependent on claims expenditure and any relevant government incentives and reforms. Because the health industry is heavily regulated, the Federal Minister for Health must approve any changes to your premium – and that can only happen once a year. So, you won't see any other price changes until April, 2019.
In 2018, nib worked hard to offer our customers the lowest premium increase in 15 years. This year nib’s average increase is 3.93% while the average increase across the industry sits at 3.95%2. We know health insurance affordability is a key concern for our customers, and we will continue to work hard to keep health insurance affordable and provide value.
Campaigning for prosthetics reform
Throughout 2017, we represented to the Government that appropriate reform would ensure Aussies who use their private health insurance in private hospitals no longer have to pay excessive prices for medical devices like prosthetics when compared to public hospital patients.
Mark Fitzgibbon, nib Chief Executive Officer said,
"Patients in private hospitals have been paying wildly inflated prices for medical devices; we’re sometimes paying up to five times what it costs in the public system for exactly the same device.”
And the inflated prices don’t just affect those who require medical devices. Mr Fitzgibbon explains,
“By introducing prosthetics reform, we’ll be saving money each time a patient requires one of these devices and we’ve made an iron-clad commitment to pass on every single dollar of savings to our customers – meaning all policy holders will benefit from this.”
After months of lobbying, in October 2017, the Federal Government announced it had struck an agreement with manufacturers of pacemakers and prosthetics to reduce the current pricing of these medical devices. And as promised, we passed on every cent in expected savings from the prostheses reforms reducing pressure on premium increases.
We’ve made an iron-clad commitment to pass on every single dollar of savings to our customers
Focusing on getting our customers better, before they get sick
Throughout the financial year 2017, we paid claims towards 314,126 hospital admissions; with an average benefit paid of $2,683 per episode. We know that no-one enjoys going to hospital, so we’re committed to giving nib customers access to a range of Health Management Programs that are delivered by qualified health professionals and can be tailored to your specific health concern – from weight management to mental wellbeing.
These intervention programs aim to help at-risk Aussies get healthy before they need to visit hospital and are available at no additional cost to eligible customers with Hospital Cover who've served their waiting periods1.
Negotiating with hospitals and healthcare providers for fair fees
nib has agreements with most of Australia's private hospitals and we’re negotiating new contracts regularly. These agreements limit the fees that nib will be charged on your behalf by hospitals for an admission to hospital. They also limit the out-of-pocket expenses you may be required to pay when you need to go to hospital.
We work hard to eliminate any out-of-pocket expenses for nib customers, which is why we have nib MediGap. When a specialist chooses to participate in MediGap, it means they’ve agreed to accept a higher benefit from nib as full payment for service – and not to charge you an out-of-pocket expense. You can find out more about nib MediGap online.
Our First Choice Network is a way to give our customers a better deal when it comes to visiting an optometrist or dentist. We negotiate and lock in lower costs with each of our First Choice providers, meaning you can rest easy knowing you’re in the hands of a trusted health professional who’ll charge you a competitive treatment fee.
13.95% is the industry average premium increase for all private insurers as reported by the Australian Government Department of Health. Industry averages are not indicative of what every customer may experience, and some products may offer either a lower or higher increase. A range of nib premiums will increase, some will stay the same, and some will decrease. Excludes any adjustment for the Australian Government Rebate. 2Available to eligible customers with Hospital Cover who've served their waiting periods. Selected locations only. For more information visit our Health Management Programs page