Health claims hit record

November 3, 2014

MEDIA RELEASE – FOR IMMEDIATE USE

Health claims hit record

Health insurance claims paid hit a new record of $265 million in the September quarter as policy numbers continue to stabilise, according to data released today by the Health Funds Association of New Zealand (HFANZ).

The record quarter takes annual claims to almost a billion dollars a year, and underpins the contribution health insurance makes to overall healthcare costs.

HFANZ chief executive Roger Styles said the recent increases in claims paid were unsurprising as public health funding increases continued to be restricted to minimal levels.

“We are increasingly seeing the private health sector filling the gaps emerging in the public system,” he said.

“Despite some increase in public surgery, it is nowhere near enough to keep up with growing demand, so people will increasingly need to fund some of their healthcare costs themselves.”

The record claims paid represented a 4.8 percent increase for the year to the end of September, while premium income grew 5.8 percent in the same period. Lives covered were down just 2800 for the year, the lowest annual drop in five years.

Mr Styles said while the stabilisation in the number of lives covered was welcome, with just 29.4 percent of New Zealanders covered by health insurance, the sector could be funding a much greater share of health costs if New Zealand actively encouraged health insurance.

“We have an unsustainable public system, with spiralling costs projected but minimal budget increments planned. It doesn’t take a genius to work out that people are going to be paying a greater share of their healthcare costs than they do today.

“Whether by accident or design, the private share of health spending will increase from today’s meagre 17 percent, and alongside that the role of health insurance will also grow,” Mr Styles said.

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Quarterly statistical summary: September 2014

This statistical supplement sets out key health insurance statistics for lives covered, claims and premiums over the previous quarter and 12 month period, together with commentary on changes and underlying trends.

Headline changes
- Lives covered down 1900 or 0.1 percent for the quarter; reduction of 2800 or 0.2 percent for the year;
- Premium income of $305 million for quarter, up 2.2 percent on June quarter; annual premium $1.19 billion, up 5.8 percent on September 2013 year;
- Claims paid for quarter of $265 million, up 3.3 percent on previous September 2013 quarter; annual claims paid for September year of $975 million up 4.8 percent on September 2013 year claims.

Lives covered
The change in lives covered was a decline of 1900 in the September quarter. Total lives covered as at 30 September 2014 stood at 1.332 million. On an annual basis, lives covered declined by 2800, or 0.2 percent over the year ending June 2014. This is the lowest recorded annual decline in lives covered since September 2009. The relatively stability in lives covered over recent quarters is welcome. Together with the positive December 2013 quarter, this suggests the prolonged decline in lives covered post 2008 has run its course.

Comprehensive vs Elective Surgical
The past year has seen a decrease in the number of lives covered by comprehensive health insurance (-10,900), although there has been an increase in lives covered by elective surgical and specialist policies (+8100). Elective surgical policies continue to increase as a proportion of policies, now accounting for 68.9 percent of lives covered.

Changes in lives covered by age-group
The table below gives a breakdown of the changes in lives covered over the past year by age group. The overall reduction of 0.2 percent for the year results from some age groups increasing while others have decreased.

The 35-49 age group has continued to see a significant reduction in the number of lives covered, down by approximately 5000 over the past year. Offsetting this somewhat was an increase of almost 3000 for those aged 65 and over, as the year saw a further significant inflow of baby-boomers moving into this age group.

The strong growth in claims paid recorded over recent quarters has moved annual claims closer towards the $1 billion level. It is expected that total annual health insurance claims will reach a billion dollars in the upcoming quarters, underpinning the valuable contribution health insurance makes to total health spending.

ENDS

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