NSW Government Cracks Down on Private Health Insurer "Hospital Bed Rorts"

ROBERT HEYWARD

The NSW Government is reintroducing legislation to ensure that Australia’s major health insurers— HCF, NIB, Bupa, and Medibank—pay their fair share when using public hospitals, after failed negotiations spanning four months. This move follows insurers’ refusal to pay the correct rate for single-room hospital beds, costing the public health system nearly $140 million per year.

In the last fnancial year, the gazetted single room rate was set at $892 per night. However, insurers are paying far less:

• HCF: Paying $463, costing NSW Health $40.5 million annually.

• NIB: Paying $491, costing $17.6 million annually.

• Bupa: Paying $501, costing $35.8 million annually.

• Medibank: Paying $515, costing $33.4 million annually. Profts in the private health insurance industry have soared, with a 110% increase in profts to $2.2 billion in 2022-23. Meanwhile, the percentage of premiums returned to customers has dropped from 88.03% in 2019-20 to 82.61% in 2022-23. Although 44 out of 53 insurers are now paying the correct rate after discussions with the NSW Government, the four largest insurers— representing 74% of the market—continue to underpay.

The NSW Government highlights that the unpaid amounts could be used to hire 1,000 additional nurses, build a new rural hospital, or reduce the elective surgery waitlist. Treasurer Daniel Mookhey emphasized the importance of enforcing this longstanding arrangement, frst demanded by thenTreasurer Mike Baird in 2013.

“My door remains open for insurers to do the right thing,” Mookhey stated, urging the companies to pay their bills. Minister for Health Ryan Park added, “Every dollar being ripped out of the public health system by private insurers is a dollar that could go to patient care, new hospitals, and hospital staff.”

The government will continue to work with those insurers who are paying the correct rate and will enforce compliance with those who do not.