The Medibank Private Ltd (ASX: MPL) share price will be on watch on Monday after the private health insurer announced its premium increases for 2020.
What did Medibank announce?
According to the release, the Federal Minister for Health has given the company approval to increase its Medibank and ahm health insurance premiums by an average of 3.27% from April 1 2020.
This is its lowest average premium increase in 19 years. This compares to the CPI inflation rate of 1.7%.
Medibank's chief customer officer, David Koczkar, said: "As pressure on household budgets continues to rise, we understand that the affordability of private health insurance remains one of the biggest issues for our customers, which is why we have worked hard to deliver our lowest premium increase in 19 years."
"Our focus has been on making our business more efficient and to reduce and eliminate unnecessary costs in the health system, so that we can deliver greater value and choice for our customers."
"Medibank and ahm has supported our customers with more than 1.3 million hospital admissions, more than 500,000 surgical procedures and more than 24.3 million extras services last year, and paid a record $5.4 billion in benefits," Mr Koczkar added.
Healthcare costs continue to rise.
The chief customer officer explained that increasing healthcare costs were the reason that its premiums were increasing quicker than inflation.
He explained: "Despite overall inflation remaining subdued in Australia, the cost of healthcare is increasing a lot faster, with medical and hospital services CPI at 3.8%. This continues to put pressure on customers' premiums."
Mr Koczkar called for further reform in order to drive down healthcare costs and ultimately premiums.
He said: "We must do more to reduce and eliminate unnecessary costs in the health system. This includes reducing procedures that have no effect, cause harm or are not worth their cost, shifting to more out-of-hospital care, addressing out-of-pocket costs and delivering further prostheses reform."
"We can no longer ignore that we are paying up to three times the price for some medical devices in the private system when compared to the public system, or that prostheses prices in the Australian private hospital setting are amongst the highest in the world."
"Governments, healthcare providers and the private health insurance sector need to continue to work together to deliver greater value and affordability for Australians and to ensure the private health sector remains sustainable," he concluded.
