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Benefits of a mutual fund revealed

Some return only 70% of premiums


Sue Dunlevy

The most miserly Australian health funds are hoarding up to 30 per cent of their premium revenue instead of handing it back to their members in benefit payments.

Australian Unity Health paid the lowest of any fund in the country – just $7 in every $10 of premium revenue it received – the latest private health insurance data shows.

Other small funds including Cessnock District Health Benefits Fund, National Health Benefits Australia, Health Care Insurance and Reserve Bank Health Society returned just 75 per cent or less of the premium revenue they raised.

Of the big four health funds for profit, nib was the stingiest, returning only 79 per cent of premium revenue to customers.

This is below the national average of 83 per cent.

Bupa returned 81 per cent and Medibank 83 per cent.

Mutual fund HCF delivered the most – 88 per cent – as did HBF.

HCF chief executive Sheena Jack said over the past decade the fund’s health insurance products had “consistently returned more in benefits than the industry average for every dollar our members paid in premiums”.

It comes as the Herald Sun releases its latest health fund calculator, which allows readers to quickly identify the cheapest policies in Victoria.

Smaller funds have to spend a greater portion of premium revenue on administration costs than big funds, which may partly explain their poor performance on this measure.

Australian Unity Health Insurance chief executive Rebecca Windsor said the 30 per cent margin for her fund was distorted due to a timing difference between the release of funds kept in reserve to cover any pandemic claims catch-up and the timing of the savings being returned to members, including the recent deferral of the 2023 premium increase to April 1, 2024.

Other analysis shows that the small funds offer more generous rebates for many procedures.

Analysis by the Australian Medical Association, published in its Private Health Insurance Report Card, shows that in October 2022 some funds were paying up to $550 less than others for the same procedure.

Mutual health funds including Australian Unity, Teacher’s Health, Navy Health and others pay doctors $2689.50 for a

knee replacement while nib pays just $2140.05.

HBF pays doctors $2190.05 for an uncomplicated delivery of a baby but nib pays just $1639.70.

Health fund Bupa pays doctors $1019.40 for the removal of a breast tumour but nib pays only $928.95.

The AMA has called for all insurers to return a set minimum – say 90 per cent – of premiums back to patients.



This article was originally released by the Herald Sun and other news.com.au publications on, Monday 30 October 2023

Link to The West Australian here.

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