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Medibank Private members paying for $100 million loss.



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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

64/2002 Monday 2 September 2002

MEDIBANK PRIVATE MEMBERS PAYING FOR $100 MILLION LOSS

The Howard Government must explain how Australia’s largest health fund, Medibank Private, could lose more than $100 million last financial year.

Minister Patterson should now urgently make public a full report into Medibank Private’s investment losses.

Earlier this year the Government approved 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%.

The loss of more than $100 million of members’ funds due to failed investment strategies raises a number of questions:

• Did the Government know about the losses when it approved an average 9% premium increase for Medibank Private members earlier this year?

• To what extent was Medibank Private aware of its financial position when it applied for an average increase of 13% in its premiums earlier this year?

• Given that a loss of $100 million amounts to more than $30 for every Medibank Private member, to what extent were this year’s premium increases - of between $150 and $250 for families - linked to paying for the fund’s international investment losses?

• As the 100% shareholder, did the Government approve of Medibank Private’s aggressive investment strategy that exposed it to huge losses when international markets turned sour?

Today’s revelations are reminiscent of Treasurer Costello’s mismanagement of the foreign currency exchange program under which the government lost $4.8 billion.

If losses of this magnitude can be racked up while Medibank Private is under Federal Government ownership, how can there be any guarantees that things would not be worse if Medibank Private was sold off by the Government?

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