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Sale of Medibank Private would mean increased premiums, poorer service and less value for money.



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M E D I A R E L E A S E

Stephen Smith MP Member for Perth Shadow Minister for Health and Ageing

46/2002 Thursday 25 July 2002

SALE OF MEDIBANK PRIVATE WOULD MEAN INCREASED PREMIUMS, POORER SERVICE AND LESS VALUE FOR MONEY

If Medibank Private is sold, health insurance premiums will rise even more, services will suffer and consumers will get less value for money.

Medibank Private is the market leader, the only truly national health insurer, and the dominant player in the industry.

The sale of Medibank Private will impact adversely not only on its three million members, but also on members of other health funds, for which the sale of Medibank Private would change the health insurance landscape forever.

Australians with private health insurance are already paying huge increases in premiums as a result of the Howard Government’s broken election promises.

Yesterday’s CPI figures showed hospital and medical costs rose by 4.9% over the quarter, driven by increases in private health insurance premiums.

This followed Senator Patterson’s decision on February 26 this year to approve average premium rises of 9% for Medibank Private, with the cost of its most popular product rising by 16% and increases in excess payments for many Medibank Private members rising by 66% to 100%.

Last year, the Prime Minister claimed the Coalition would make “private health insurance more affordable and attractive to consumers”. To the contrary, premiums increased by an average of 7% immediately after the election with some premiums soaring as much as 36%.

Australian families with private health insurance, very many of whom are under financial pressure, are now under greater financial pressure than before.

Even if there was merit in the sale of Medibank Private, it makes no sense to proceed without first addressing the complex competitive and regulatory arrangements in the private health insurance industry with a view to improving efficiencies and giving consumers better value for money. Consideration of these issues is currently bogged down in the deliberations of an interdepartmental committee.

The Government wants to do to Medibank what it has done to Telstra. If the sale proceeds, Australians can expect more premium increases, poorer service and less value for money. We’ve seen it for Telstra and we’ll see it for Medibank Private too.

Media Contact: Andrew Dempster 02 6277 4108 or 0407 435 157