Radio interview with Minister Butler and Chris O'Keefe, 2GB Drive – 5 March 2024

Read the transcript of Minister Butler's interview with Chris O'Keefe on private health premiums rising less than other insurance.

The Hon Mark Butler MP
Minister for Health and Aged Care

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CHRIS O’KEEFE, HOST: I foreshadowed this last week, didn't I, but our private health insurances they're on the increase, they're going up now. The Health Minister Mark Butler, he's landed on a 3% increase from April 1st. So, that means that 15 million of us will be paying hundreds of dollars more in just a few weeks' time for our private health insurance premiums. Now, the 3% increase is the industry average. Some funds will be higher, some will be smaller, but average will be 3%. So, for example, Medibank Private, they'll see average premiums jump by 3.3%. Bupa will be up 3.6%, a 4% hike for HIF, and NIB premiums will be up 4.1%.
Now to Minister Butler's credit he told the health insurance companies where to go, because they came to him late last year and they were asking for an average of a 6% increase. And he said: “no, go back to the table and come to me with something a little more palatable for the Australian public.” And while no increase is welcome, of course it's not, this is unfortunately just necessary. It is necessary because if insurance companies don't reimburse the private hospitals at a rate that makes them financially viable, then those private hospitals will close. And we've seen them already – we've got a private hospital in Orange that went into administration, Tuggerah Lakes Private Hospital closed after just 5 years, plus 14 others around the country have shut their doors and what that means is that it just puts more pressure on an overstretched public health system, and we don't want that. And to fix an overstretched public health system. You know what happens? We spend more taxpayer money on it. So just becomes a circular economy.
Ramsay Health Care they run hospitals like Castlecrag, Kareena at Caringbah, North Shore Private, Westmead Private and so on. Now, Ramsay Health Care says that their total costs across wages, medical supplies, contractors and so on rose 11.7% last year. Yet our insurances are only going up 3%. So really, I've got a lot of sympathy for the Minister. He is walking a very fine line, and it is all a delicate balance to be honest. Well, I'm pleased to say Health Minister Mark Butler is on the line. Minister, thanks for your time.
O’KEEFE: So how much of an increase did the health insurance companies initially want you to green light? 
BUTLER: We keep these things confidential, but it was substantially higher than the 3% that I've approved. I approved it late yesterday and announced it this morning. And also, as your listeners unfortunately will know, insurance products generally are going up way more than that. We're told that the average non-health insurance increases – your home and contents insurance, your car insurance, and like – the average increase last year was 17% on other insurance products. So, we're really conscious the cost-of-living pressure that households are facing right now and any increase in something as important as your health insurance policy is going to be hard to bear. But we've worked really hard over the last few months to keep those increases down as low as we possibly could do as you say. The hospitals, the private surgeries, all of those deliverers of healthcare that are ultimately funded by health insurance, they're seeing their costs go up. We didn't have a scenario where we could freeze health insurance premiums, but I think keeping them at 3%, which is lower than wages growth at the moment, lower than the increases we've been able to make to the pension, yes, it will be tough for households, I'm acutely aware of that, but we've worked really hard to keep it down at 3%. 
O’KEEFE: It's an interesting situation where you've got actually government oversight of health insurance premiums, whereby other industries where people home and contents like you say, car insurances, there isn't such government oversight? 
BUTLER: Private health insurance is an important part of our health system. When Gough created Medibank, when Bob Hawke created Medicare, 40 years ago almost to the day, Labor had a view that we had to have a mixed health system in this country. So yes, there'd be a universal health insurance system through Medicare that would fund things like GP visits, fund the public hospital system. But I think one of the great things about our health system in Australia is that it's a mixed system, that you do have these private hospitals that do the majority of elective surgeries. You have a whole range of other benefits from your private health options insurance, which 15 million Australians now hold. So, maintaining that viability actually is a public interest. It's not just a private market, this is part of an interconnected health system that is one of the most critical jobs governments have as well. Frankly, private health insurance gets substantial subsidies through the private health insurance rebate. That's about $7 billion of taxpayer funds every year that really underpin the viability of the system. So that's really why we have skin in the game as a government. 
O’KEEFE: So, when we raised this last week, though, one of the big bugbears from our listeners was that they might pay a decent whack in their health insurance premiums but when they go to use it, they're still paying thousands and thousands of dollars for elective surgery. Or they go into a private surgery and they're still out of pocket a fair bit. A lot of people are saying, well, I don't necessarily see the value in value for money in it? 
BUTLER: Let me come back to the question of out-of-pocket costs and whether people have a good level of information about what they're going to be up for as they go into a procedure, but more Australians are signing onto private health insurance than ever before. We've seen over the last few years insurance numbers go up. It wasn't just during COVID, it's continued since COVID started to taper away.
O’KEEFE: Is that because what we've seen at public hospitals, sorry to interrupt, is that because people have been to the ER and gone: “oh forget this?”  
BUTLER: There’s a whole lot of theories about what's driving the increase in membership, whether it's the fact that elective surgery waiting lists are pretty long at public hospital systems, so you have more of a chance of getting that knee done or that hip replaced if you buy into the private health insurance system. None of us know exactly what's motivated every single Australian. But the fact is the insurance industry is attracting more people than they have in the past. I think that's good for the viability of the sector but like your listeners are feeding back to you, I constantly get feedback that people don't feel that they have good information of the gap fees that they're going to be paying, and it's not for the hospital costs – because they won't be paying gap fees for that – but it might be for the surgeon or the anaesthetist.
My predecessor Greg Hunt, when he was health minister, set up something called the Medical Costs Finder, which is supposed to be a website that people can go on and check, for example, what different anaesthetists in their area, or different surgeons or different psychiatrists are charging, but it's not really worked. Very few specialists have actually signed on to this scheme. So, you can go on to it, but you won't find much information on it unfortunately. We're looking at alternatives to make sure that people have good information and can make their choices. 
O’KEEFE: Because it's one thing if you need a knee replacement, for argument's sake, or a hip replacement, as you mentioned, and you go into North Shore Private or Westmead Private and you book in and you've got top cover and you think, “oh, I'll be okay.” And then you get a bill for 2, 3 or $4,000 because as you said, anaesthetist specialists and all these other add-on costs. You'd think to yourself, “well, hang on a second, what am I paying the insurance premium for?”  
 BUTLER: That’s right. And so, there's control over what hospitals can charge but there's no government regulation really over saying that surgeons can't charge a gap fee or anaesthetists can't charge a gap fee either. What I think Greg Hunt had in mind is that at least people would have good information and they'd know if you're on the North Shore that there might be an anaesthetist there that would charge less and you could choose to go there, but that just hasn't really worked.
We’re working through the ways in which we could improve that. Can I make the point, though, Chris, as your listeners think about their private health insurance coverage, I would always encourage people to go on to a website which is That is a website run by the Private Health Insurance Ombudsman. An independent ombudsman gathers all of the information on all of the different private health insurance products. You should always be just checking the insurance product you have: What is the cost? What are the increases? What are the benefits that are offered by that insurance company? And compare it to others in the market. That’s a website that you can be confident – your listeners can be confident – is independent and overseen by the Ombudsman.
O’KEEFE: Minister, we've run out of time, but I appreciate you jumping on and giving us all that information because it's important to people. We pay a lot of money in private health insurance. Some people get something out of it, others don't. But the viability of this sector is critical. I think a 3% industry average increase that you've landed on is more than fair. Thanks so much. 
BUTLER: Good to talk to you, Chris  

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