6 February 2020

HCF, Australia’s largest not for profit health insurer and the 3rd largest insurer nationally has responded to APRA Board Member Geoff Summerhayes remarks at a Conference in Sydney on February 4, where he expressed concern over the sustainability of the Private Health Insurance industry over the next few years.

“Mr Summerhayes has pointed out the challenges facing the private health insurance industry, particularly the pressure being placed on it by the growth of the older population at the expense of the younger population” said HCF CEO, Sheena Jack.

“This trend obviously puts pressure on premiums as the insured population shifts to the ageing demographic who have a far greater call on health services.

These pressures aren’t new. They are well understood by insurers, regulators and government.  However, while we agree that the industry has challenges, we would question the proposition by Mr Summerhayes that, without change, only 3 PHI providers will survive in 2022.”    

In 2018/19, HCF grew by over 8 times the industry rate, growing more than all the other funds combined. The number of Australians with private health insurance covered by HCF is 1.6 million. That’s an increase of 65,000 more lives since 2017-18.  Our growth rate in policies during that period was 5% compared to the industry average of 0.6%.

“Despite our positive growth, we aren’t waiting for others to step in with a magic wand. We are implementing numerous initiatives to ensure our 1.6 million members are receiving the best value from their policies” said Ms Jack. 

“We are managing premium increases through better negotiated rates with service providers.  We have a comprehensive Hospital and Medical Purchasing Strategy in delivery phase.  We are developing innovative ‘no gap member initiatives’ including obstetric no gap models to enhance the value proposition of PHI. We are testing models of care at home that deliver effective clinical and cost outcomes in areas such as rehabilitation and cancer services. These are just a few examples of where we are focusing our efforts.

In addition to that, we are effectively managing our cost base. And, as Australia’s largest not for profit health fund, we don’t have to provide a shareholder return.  Instead we can continue to keep premiums as low as possible.  For example, this year’s increase is the second lowest in nearly 2 decades.  HCF is very well capitalised with a strong future ahead for its 1.6 million members.”

On the matter of raising capital, the mutual sector can today raise additional capital in various forms due to recent legislative changes. An advantage the mutual sector has over listed health funds is that mutuals have no requirement to generate profits needed to support expected shareholder returns and dividends.

HCF supports calls by Private Healthcare Australia (PHA) and Members Health Alliance (MHA) for possible short term measures that could be implemented to put downward pressure on claims, including removing general and miscellaneous non-prostheses from the Prosthesis list; implementing recommendations of the MBS review which have the potential to reduce low-value care; and compliance measures to limit the increase in private patients in public hospitals driven by State Government cost shifting

“We are working with the government on ways to improve participation in private health, particularly for younger people, and working with clinicians and the government on improved models of care.

It’s also important that we build and maintain confidence in PHI in Australia because an efficient private system is vital to the overall health care of all Australians” Ms Jack concluded.



About HCF

HCF, Australia’s largest not-for-profit health fund protecting Australians since 1932, covers over 1.6 million members with health and life insurance, travel and pet insurance. On average over the last five years, HCF has paid out more cents in every dollar in premiums to members as benefits than the industry average. With over 35,000 specialists participating in its Medical Gap Cover Scheme and over 19,000 provider locations forming part of its More for You network, HCF gives members access to quality health care with no gaps or minimal costs compared to non-participating providers. To empower members to put their health first, HCF also offers a range of health and lifestyle services, mobile Victor Chang Health Checks and the HCF second opinion service. HCF’s national network of branches and Australian-based call centres have earned multi-award winning status. HCF members also have access to low cost, high quality services at HCF Dental Centres and HCF Eyecare Centres. Having contributed $50 million to support the health services research funded by the HCF Research Foundation, HCF is devoted to investing in the future of Australia’s health. HCF has been voted the most trusted health insurer 2 years in a row – as voted in the Roy Morgan Net Trust Survey 2018 & 2019. To learn more about HCF go to hcf.com.au/about-us