ARTICLE – CO-OPERATIVES IN PRIVATE HEALTH INSURANCE IN AUSTRALIA
In 2012, Australia celebrates the United Nations International Year of Co-operatives. This article was contributed by The Hospitals Contribution Fund (HCF) and recognises the year by looking at the role of co-operatives in private health insurance in Australia.
Private health insurance is a major contributor to financing health services in Australia, contributing about 11% of national health expenditure (AIHW, 2011). Policyholders are supported by the Australian Government, which provides a 30% rebate on paid contributions (35% for those over 65 years and 40% for those over 70). Private health insurance co-exists with public funding of health services by the Australian, state and territory governments (see HEALTH CARE DELIVERY AND FINANCING for details).
The private health insurance industry is heavily regulated. Insurers must satisfy legislative requirements for community rating, coverage of policies, minimum benefits, maximum waiting periods, portability of entitlements and quality assurance. Community rating refers to the prohibition of discrimination (e.g. based on age or risk rating) under the Private Health Insurance Act 2007 (Cwlth); community rating requirements include the need to seek approval from the Government for all premium changes and a 12% limit on discounts offered to policyholders. Quarterly reporting of financial and statistical performance to an industry regulator (the Private Health Insurance Administration Council) is mandatory, and an ombudsman (the Private Health Insurance Ombudsman) provides a complaints resolution referral service.
Private health insurance in Australia has a long history, starting with the friendly society movements of the 1840s. Government subsidies for hospital and medical services from 1953 led to new players entering the field, some from employer sponsorship. Additional health insurers started up, following further major legislative changes, in 1970 and again in 1984. By the mid 1980s, Australia had its first for-profit health insurer. A number of structural changes in the industry have occurred since then, with more insurers becoming for-profit entities, a number of mergers, and a privatisation and subsequent ASX listing. This rationalisation in the industry has been driven by alignment of interests, financial rescues and other factors.
At the start of 2012, the not-for-profit sector of the private health insurance industry comprised 27 of the 35 registered insurers. They ranged in size from 1.4 million members down to just 4,000 (excluding one that is registered but not operating yet). At the end of June 2011, the not-for-profit sector had 32% of the market share of the private health insurance industry (based on premium revenue shown in PHIAC, 2011). Most private health insurers share commercial affiliations through their common interests. These are driven by the increasing complexity of operations, service delivery and regulation/compliance. HAMBS, a not-for-profit co-operative company formed by a number of private health insurers, provides computer software (the Hospital and Medical Benefits System), in competition with commercial suppliers. The Australian Health Service Alliance (AHSA) and the Australian Regional Health Group (AHRG) provide collective negotiation advice and associated services for member funds.
Statistics contained in the Year Book are the most recent available at the time of preparation. In many cases, the ABS website and the websites of other organisations provide access to more recent data. Each Year Book table or graph and the bibliography at the end of each chapter provides hyperlinks to the most up to date data release where available.
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This page first published 24 May 2012, last updated 11 November 2015
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ARTICLE – CO-OPERATIVES IN PRIVATE HEALTH INSURANCE IN AUSTRALIA
In 2012, Australia celebrates the United Nations International Year of Co-operatives. This article was contributed by The Hospitals Contribution Fund (HCF) and recognises the year by looking at the role of co-operatives in private health insurance in Australia.
Private health insurance is a major contributor to financing health services in Australia, contributing about 11% of national health expenditure (AIHW, 2011). Policyholders are supported by the Australian Government, which provides a 30% rebate on paid contributions (35% for those over 65 years and 40% for those over 70). Private health insurance co-exists with public funding of health services by the Australian, state and territory governments (see HEALTH CARE DELIVERY AND FINANCING for details).
The private health insurance industry is heavily regulated. Insurers must satisfy legislative requirements for community rating, coverage of policies, minimum benefits, maximum waiting periods, portability of entitlements and quality assurance. Community rating refers to the prohibition of discrimination (e.g. based on age or risk rating) under the Private Health Insurance Act 2007 (Cwlth); community rating requirements include the need to seek approval from the Government for all premium changes and a 12% limit on discounts offered to policyholders. Quarterly reporting of financial and statistical performance to an industry regulator (the Private Health Insurance Administration Council) is mandatory, and an ombudsman (the Private Health Insurance Ombudsman) provides a complaints resolution referral service.
Private health insurance in Australia has a long history, starting with the friendly society movements of the 1840s. Government subsidies for hospital and medical services from 1953 led to new players entering the field, some from employer sponsorship. Additional health insurers started up, following further major legislative changes, in 1970 and again in 1984. By the mid 1980s, Australia had its first for-profit health insurer. A number of structural changes in the industry have occurred since then, with more insurers becoming for-profit entities, a number of mergers, and a privatisation and subsequent ASX listing. This rationalisation in the industry has been driven by alignment of interests, financial rescues and other factors.
At the start of 2012, the not-for-profit sector of the private health insurance industry comprised 27 of the 35 registered insurers. They ranged in size from 1.4 million members down to just 4,000 (excluding one that is registered but not operating yet). At the end of June 2011, the not-for-profit sector had 32% of the market share of the private health insurance industry (based on premium revenue shown in PHIAC, 2011). Most private health insurers share commercial affiliations through their common interests. These are driven by the increasing complexity of operations, service delivery and regulation/compliance. HAMBS, a not-for-profit co-operative company formed by a number of private health insurers, provides computer software (the Hospital and Medical Benefits System), in competition with commercial suppliers. The Australian Health Service Alliance (AHSA) and the Australian Regional Health Group (AHRG) provide collective negotiation advice and associated services for member funds.
BIBLIOGRAPHY
REFERENCES
Australian Institute of Health and Welfare (AIHW) 2011, Health Expenditure Australia 2009–10
Gale, A and Watson, D 2007, Adventures in Health Risk: a history of Australian health insurance, Institute of Actuaries of Australia
Private Health Insurance Administration Council (PHIAC) 2011, Operations of the Private Health Insurers Annual Report 2010–11
WEBSITES
Australian Health Service Alliance
Australian Regional Health Group
Department of Health and Ageing
Hospital and Medical Benefits System (AMBS)
Private Health Insurance Administration Council