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Health premiums are on the rise again – one insurer says it’s time to stop getting sick

Medibank chief Craig Drummond wants Australia to focus more on preventative health to make the community – and the system – better long-term.

Mar 31, 2021, updated Apr 01, 2021
Medibank chief Craig Drummond wants governments to do more about prevention. (AAP Image/Mal Fairclough)

Medibank chief Craig Drummond wants governments to do more about prevention. (AAP Image/Mal Fairclough)

Addressing the QUT Business Leaders’ Forum on Wednesday, Drummond said the fact that two per cent of Australians accounted for one third of the nation’s health care costs could no longer be ignored.

Drummond said chronic conditions were being mismanaged, putting pressure on public hospitals, and the ageing population was only compounding health issues that were largely preventable.

“It is unhealthy lifestyle and essentially obesity,” Drummond said, pointing to figures showing two thirds of Australians were obese or overweight.

“Australia is the second most obese country in the world behind the US.”

Despite the need to make Australia healthier, and keep people out of hospital, Drummond said less that one per cent of government spending went towards preventative health. He suggested the time it would take for any investment to generate a return for taxpayers failed to align with the election cycle.

“Whatever we do in preventative care is a generational thing, it’s not going to make a difference in the next 12 months,” Drummond said.

Drummond said the Federal Government should revisit its abandoned Health Care Home trial to ensure people benefitted from more effective, and efficient, interventions sooner.

But he said successive governments with small parliamentary majorities lacked the political capital to push through reforms, instead seeking to provoke community self-interest in an effort to hold power.

Drummond gave as an example the “bold reforms” promised by Labor at the last election but used against the party by the Coalition, which ultimately held power.

“Politics are more important than policies,” he said.

“The behaviour generally over the last 15 years has been pretty poor.”

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Medibank, like other insurers, has continued to cut costs, and seek to better manage the healthcare needs of members. The former government-owned fund is now a for-profit, and the second-largest in Australia behind Bupa.

While premiums will increase by an industry weighted average of 2.74 per cent tomorrow – 3.25 per cent for Medibank – Drummond said that was still below health inflation and came after the insurer sought to respond to COVID-19 disruption.

Drummond said 50 per cent premium discounts for members affected by the pandemic had cost the company $65 million, while deferring the 2020 increases for six months cost another $130 million. Medibank also did not accept JobKeeper payments and decided not to pay bonuses to executives.

After a long-running decline, the proportion of Australians with hospital cover – a key measure in balancing out the private and public sectors – appears to have stabilised at 43.9 per cent.

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