Putting members’ health before profit

Members Health funds prepare for growth in 2019 reform year

Considered the Industry Super equivalent of health insurance, Australia’s smaller not-for-profit, member owned and community based funds are fundamental to maintaining competition and choice for all consumers.

There are presently 37 competing health funds in the sector, ranging from the very small to very large; from the publicly listed and internationally owned to the regional, community and industry based; from the for-profit to the not-for-profit.

“That diversity of choice is a good thing for consumers and its value must not be underestimated or taken for granted,” said Members Health Fund Alliance CEO Matthew Koce.

“Right now, it is the Members Health funds who are the success story of private health. Run exclusively for policyholders, not shareholders or overseas investors, they are critical to the competitive landscape.”

Members Health represents 25 funds including Australian Unity, Police Health, and Teachers Health. Our funds are closely connected to their memberships and communities of interest, and have been around for a very long time, many even pre-dating the Federation of Australia.

Data from the Australian Prudential Regulation Authority reveals consumers are becoming increasingly aware of the benefits of being with a Members Health fund. As a group, APRA data shows our funds have been growing by more than double the industry average.

Members Health funds grew by a healthy 2.7 per cent over the 12 months to June 2018, while the rest of the industry shrunk overall by -0.18 per cent. Over the same period, our funds saw an increase of 54,586 persons covered under hospital treatment policies, while the rest of the industry saw a decline of more than 114,000.

Over the past five years, Members Health funds have achieved an average growth rate of 3.67 per cent – a stark contrast to the rest of the industry, which grew by just 0.94 per cent.

“The growing popularity and success of the Members Health funds is not a surprise,” Mr Koce said.

“As a group, participating Members Health funds consistently record customer satisfaction scores of 96 per cent or higher. Why? Because they return more to policyholders in benefits instead of generating dividends for shareholders or overseas investors.”

But with such diversity in the private health insurance space, and rapidly growing consumer awareness of the benefits of not-for-profit, member owned funds, Mr Koce warned that any industry consolidation “would be disastrous for consumers”.

“In private health insurance, we have not seen anything even close to the sort of situation that followed the privatisation of the Commonwealth Bank,” he said.

“A situation in the banking sector where market power is vested in the big four banks is the last thing anyone would want in private health insurance.”

“A competitive and diverse marketplace provides the best possible protection for consumers and it is important that the lessons of consolidating the banking and finance sector are learned and not repeated elsewhere.”

Looking towards the Government’s private health insurance reforms, which take effect from 1 April 2019, Mr Koce said Members Health was optimistic about the opportunities in store for both industry and Australian consumers alike.

“Right now we are preparing for even more growth following the Government’s reforms, which will bring new standardised clinical definitions and product categories that will make it easier for consumers to shop around, compare products and get the best value from their health insurance.

“It will also allow health funds to offer youth discounts and travel and accommodation cover for policyholders in rural and regional areas who need to access care outside their local community.”

“We anticipate that these consumer focused reforms will drive significantly increased private health insurance participation as Australians seek to access the excellent care available through private hospitals and avoid the long and arduous public hospital waiting times that can run into the months and years.”

Members Health is the peak national body for 25 health insurers, which are not-for-profit, member owned and community based. In all, the Members Health funds provide private health insurance to over 2 million Australians.

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