The Federal Government, has announced its plan to take a $300 million ”special dividend” from government-owned health fund, Medibank Private and has brought strong criticism from the private health industry.
Martin Laverty, the chief executive of Catholic Health, said the effects of the $300 million taken from Medibank Private would be felt by the all users of private health services.
“There is no lazy money sitting in the private healthcare sector at present for a $300m impost to simply be absorbed. It’ll either result in premium increases or cuts in payments to hospitals. Either way, patients are worse off,” he said.
The Health Insurance Association was constrained from commenting because the government-owned Medibank is its biggest member. However health insurance executives noted, on background, that Health Minister Nicola Roxon would not have allowed Medibank to increase premiums by 5.74 per cent in April this year if she had been advised by the Private Health Insurance Administration Council that Medibank Private were carrying excess capital.
Health Insurance actuary Brent Walker has forecast that this will trigger a 7.5 per cent lift in premiums over the coming years.
When asked if he could guarantee the $300 million taken from Medibank would have no increase to premiums, Wayne Swan, the Treasurer, said the move ”should have no impact on health insurance rates” set by Medibank.
”I can certainly say that reserves for Medibank Private are very strong.”
In October 2009 Medibank Private was converted from a non-profit to for-profit company which means they will also be paying 30 per cent company tax.