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Premium increases unfortunate but unavoidable

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Australia's Commonwealth Media Release - Dr Wooldridge

Media Release

31 *.

Dr Michael Wooldridge

MW 101/97 17 September, 1997


Federal Minister for Health and Family Services, Dr Michael Wooldridge, said the premium increases announced by MBF and Medibank Private today were unfortunate but unavoidable.

"These applications have been taken apart and subjected to the most detailed scrutiny by the Government to ensure that they were necessary and justified," Dr Wooldridge said.

"These increases are unfortunate but unavoidable.

"At the end o f the day we were faced a difficult choice: to approve the applications or to jeopardise the financial and prudential health of these funds. We have a responsibility to ensure that they maintain adequate capital reserves.

"It's a bitter pill for the funds themselves, because they would rather not be lifting their premiums in such a competitive market. They're forced into this situation because the payouts to their members have risen substantially more than their contribution income.

"At our request MBF has agreed to establish a new insurance table to give their members some choice about whether to pay the increase or move to a modified level o f cover," he said.

Dr Wooldridge said legislation to be debated in Parliament shortly would introduce important reforms to help the funds better control their costs and become more competitive.

"This is a very complex industry which is still suffering from cost pressures built up over 13 years o f neglect under the former Government. Premiums have been rising for 13 years and it is not possible to turn around this situation overnight," Dr Wooldridge said.

"By putting in place new incentives for funds and hospitals to better contain the growth in costs, by addressing the problem o f 'hit and run' members, and by providing a more competitive operating environment the Government will help restore greater stability for the health insurance industry," he said.

Dr Wooldridge said that members who were affected by premium increases should remember that they can shop around and change to another fund with no loss o f immediate eligibility for benefits provided they took out a similar level o f cover. People switching funds to take advantage o f a cheaper premium should check carefully to ensure they choose the same level of cover and have continued

immediate eligibility for benefits.

Media Contact:

Bill Royce, Dr Wooldridge's office (02) 6277 7220

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