Australians are likely to be hit with higher health-insurance premiums next year after the largest private fund experienced a surge in claims and paid out a record $2.13 billion.
Government-owned Medibank Private will issue its benefits report for 2007-08 today and lodge its annual application for a premium increase in about a month.
Federal Health Minister Nicola Roxon has the power to approve or reject applications for premium rises that exceed inflation.
Medibank Private deputy managing director Bruce Levy said the fund spent a record $21.3 billion on members' claims for hospital services in 2007-08, with ''overall costs growing at a rate well in excess of inflation''.
''It is an ongoing battle to keep this cost growth contained and the report shows that we have been fairly successful in terms of managing growth in unit costs, which have remained fairly flat from last year,'' he said.
Ms Roxon previously put health funds on notice, saying the Rudd Government ''will not take the tick-and-flick approach of the previous government'' when dealing with their annual bids to increase premiums. Several insurers were directed to review their applications because she feared the rises ''may be larger than necessary''.
Premiums have skyrocketed by about 50 per cent, on average, since 2001. The increases are widely felt in the ACT, which has the highest percentage of people with private health cover.
Mr Levy said Medibank Private had paid out $2.13 billion in claims, including $34 million for members in the ACT during 2007-08.
''Nationally, hospital utilisation grew by 6.7 per cent with ... members claiming an additional 51,052 hospital admissions over the previous financial year. The figures also show that it is day procedures that are the principal driver of the increased utilisation, accounting for three-quarters of the extra hospital admissions,'' he said.
The most common day procedures were colonoscopy, chemotherapy, renal dialysis, gastroscopy and cataract treatment. The average cost ranged from $361 for dialysis to $3177 for cataracts.
For patients admitted overnight to hospital, the top procedures were childbirth, rehabilitation, knee replacement, gall bladder removal and shoulder surgery.
Knee replacement was the most costly at $19,634 on average.
It was slightly different in the ACT where childbirth, knee replacement, hip replacement, hysterectomy and removal of the gall bladder were the most common procedures among patients who stayed overnight in hospital.
Colonoscopy, chemotherapy, cataracts, gastroscopy and dental surgery were the top day procedures.
Mr Levy said health care was an ''expensive business'', with pricey medical technology and the ageing population driving costs.
''Growth in utilisation continues to be a challenge and the burden of chronic disease continues to grow,'' he said.
''Almost half of Medibank's total benefit outlay is spent on claims by just 2 per cent of our members, and these high claimers tend to be people with underlying chronic disease, which adds significant costs to the system.
''One solution is to increase investment in preventative health and disease management to try to reduce the need for hospital-based acute care and it is this direction that Medibank Private is moving in.''
Private health funds usually lodge their applications to increase premiums in December.
Ms Roxon has warned insurers against using recent changes to the Medicare levy surcharge as an excuse to try to lift their premiums.
About 250,000 Australians will receive a tax cut and 492,000 are expected to dump their private health cover after Parliament passed the changes about a month ago.
Individuals and couples without private health insurance can now earn up to $70,000 and $140,000 respectively before they pay the 1 per cent surcharge. The old thresholds were $50,000 for singles and $100,000 for couples. Ms Roxon told Parliament at the time, ''This measure is something that has returned choice to those working families and singles who are doing it tough.''
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