Health insurance numbers stabilising: HFANZ

February 10, 2012

Health insurance numbers stabilising: HFANZ

Data showing the recent decline in health cover is stabilising has been welcomed today by the Health Funds Association (HFANZ).

Chief executive Roger Styles said the December 2011 quarter saw a decline of just 0.1 percent in lives covered, though the total number of lives insured - 1.358 million - was still around 2.7 percent lower than the recent peak three years ago.

“It appears that coverage is stabilising, with around 31.5 percent of New Zealanders covered by health insurance,” he said today.

The quarter also showed signs that large increases in claims costs over recent years were beginning to moderate, with claims costs up just 1.1 percent on the December 2010 year.

“This is welcome news for policyholders because claims costs are ultimately reflected in premiums,” he said.

Total premium income for the December 2011 year was $1.038 billion, up 7.9 percent on the December 2010 year.

“There has still been a bit of necessary catch-up, as premiums are adjusted to reflect historic claims growth, which has averaged around 9 percent over the past five years,” Mr Styles said.

Despite the stabilising numbers, Mr Styles said New Zealand really needed to be looking to increase overall coverage to help ease pressure on public health budgets. In briefing papers to the Minister of Health, released last week, he warned of the growing public-private imbalance, and the longer term unsustainability of public sector health costs given New Zealand’s high dependence on public funding.

Addressing long-term fiscal sustainability issues was also a key feature in the Treasury’s briefing papers to the Minister of Finance, which recommended “building broad public consensus on the required policy adjustments, particularly in the areas of health and retirement income.”

“It is clear that people will have to pay a greater contribution to their healthcare costs in the future, though the manner in which this will occur is unclear. The sooner we debate the policy choices, the better. Health insurance has the potential to play a key role in moving to a more sustainable health system over the longer term,” Mr Styles said.

Health Insurance Statistics December 2011

This is a quarterly supplement providing statistical information for the health insurance industry in New Zealand. It contains data on the most recent quarter, ended December 31, 2011.

Lives covered fall 0.1 percent in December quarter

The number of lives covered fell by 1600 (0.1 percent) in the December 2011 quarter, taking total lives covered to 1.358 million. This is a decrease for the full year of 24,100 (-1.7 percent) compared with December 2010.

The past three years from December 2008 to December 2011 has seen a decline of 39,000 lives covered, or 2.8 percent.

Trend to elective surgical cover

The trend away from comprehensive health insurance toward elective surgical and specialist cover continues. The net 24,100 decrease in lives covered over the year represents a decrease of 9600 people with elective surgical and specialist cover, and a reduction of 14,500 having comprehensive insurance policies.

Elective surgical and specialist cover now accounts for 915,300 of the 1.358 million lives covered, or 67.4 percent of those covered by health insurance. Comprehensive health insurance coverage accounts for just 442,800 lives covered, or 32.6 percent of policies.

Lives covered by age

A breakdown of the lives covered by age group indicates the reductions have been spread across most age groups. The year has seen a significant reduction in lives covered among those of working age and children, suggesting a drop in the number of family health insurance policies. It is noted that the decline in coverage for those aged between 35 and 49 accounts for nearly half of the total reduction across all age groups.

At the same time, coverage for older age groups has declined, despite the demographic movements and increase in population in older age groups. The year saw a reduction of 2500 (-1.0 percent) in the number of people aged 60 and over with health cover.

The table below shows the overall movements for the year for each five-year age band.

Table: Lives Covered by Age group: December 2010 and December 2011

Premiums paid up 7.9 percent

Health insurance earned premiums in the December 2011 quarter were $268 million, compared with $261 million for the September 2011 quarter. Premium income for the full year ended December 31, 2011, totalled $1,038 million, an increase of $76 million or 7.9 percent on the $962 million in premium income for the December 2010 year. Increased premium income reflects adjustments following rapid growth in claims costs over recent years.

Claims paid up 1.1 percent

Health insurance claims paid in the December 2011 quarter totalled $217 million, taking claims paid in the 12 months to December 2011 to $833 million. This is an increase of $9 million, or 1.1 percent, on the total claims paid in the 12 months to December 2010. Growth in claims costs has been running at a high level over recent years due to increased demand, expansion of services funded, and medical inflation.

The 1.1 percent annualised claims growth is the second-lowest since the March 2004 quarter and continues a downward trend since claims cost growth peaked at 13.2 percent in the December 2008 quarter. While the decline in lives covered has influenced this, it appears that broader insurer measures to help address medical inflation are starting to have an impact.

ENDS

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