Growth in health claims, premiums

July 28, 2014
MEDIA RELEASE – FOR IMMEDIATE USE

Growth in health claims, premiums

Health insurers have seen modest growth in claims and premium over the past year as public health spending growth continues to be reined in.

Data released by the Health Funds Association (HFANZ) today shows claims costs for the year ended June 2014 were up 7 percent on the previous June 2013 year, while premium income for the year was up by 5.3 percent – more than twice the rate of public spending growth.

HFANZ chief executive Roger Styles said the growth in private health claims and premium was not surprising considering the public health sector had been in cost-cutting mode for some time.

“With public health spending growth at very low levels, we are seeing the private sector doing more and more to fill the gaps created in our health system,” he said.

“Health insurance is increasingly called on to help fund things which people have trouble accessing publicly, such as elective surgery.”
A recent study by TNS Research showed around 280,000 New Zealanders were in need of elective surgery, with public waiting times commonly in excess of 12 months.

Mr Styles said that health systems globally were in a phase where demand was rising faster than governments’ ability to fund it through taxes.

“This means a big shift is underway in how healthcare is financed, where people will have to pay more for their healthcare. New Zealand is not immune from this shift, and insurance will likely play an even bigger role helping to fund healthcare for New Zealanders,” he said.

ENDS (Three-page statistical summary follows)

Quarterly statistical summary: June 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 1200 or 0.1 percent for the quarter; reduction of 5000 or 0.4 percent for the year;
Premium income of $298 million for quarter, up 1.3 percent on March quarter; annual premium $1.172 billion, up 5.3 percent on June 2013 year;
Claims paid for quarter of $250 million, up 1.8 percent on previous June 2013 quarter; annual claims paid for June year of $967 million up 7.0 percent on June 2013 year claims.
Lives covered
The actual change in lives covered was a decline of just 1200 in the June quarter. Total lives covered as at 30 June 2014 stood at 1.334 million. On an annual basis, lives covered declined by 5000, or 0.4 percent over the year ending June 2014. The relative stability in lives covered over recent quarters is welcome, and comes after a positive December 2013 quarter suggested the prolonged period of decline in lives covered post 2008 had run its course.

Comprehensive vs Elective Surgical
The past year has seen a decrease in the number of lives covered by comprehensive health insurance (-10,300), although there has been an increase in lives covered by elective surgical and specialist policies (+5300). Elective surgical policies continue to increase as a proportion of policies, now accounting for 68.6 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. A large part of the reduction is in the 35-49 age group, with this group accounting for a reduction of around 5000 lives covered over the year. A further 3000 reduction was seen in the 0-19 age group, suggesting family policies accounted for almost all of the reduction over the past year. Offsetting this somewhat was an increase of around 3000 for those aged 65 and over, as the year saw a further significant inflow of baby-boomers moving into this age group.
Table: Change in lives covered by Age: June 2014 year
Age Jun
2013 Jun
2014 Change Percent
0–4 63,405 63,101 -304 -0.5%
5–9 82,256 82,730 474 0.6%
10–14 84,214 83,594 -620 -0.7%
15–19 88,617 86,188 -2429 -2.7%
20–24 77,656 77,355 -301 -0.4%
25–29 66,740 68,276 1536 2.3%
30–34 80,541 82,453 1912 2.4%
35–39 94,818 93,315 -1503 -1.6%
40–44 115,424 113,820 -1604 -1.4%
45–49 117,906 116,007 -1899 -1.6%
50–54 121,931 120,645 -1286 -1.1%
55–59 108,601 108,464 -137 -0.1%
60–64 93,069 91,339 -1730 -1.9%
65–69 63,531 64,920 1389 2.2%
70–74 36,868 37,785 917 2.5%
75–79 20,543 21,094 551 2.7%
80–84 13,462 13,247 -215 -1.6%
85–89 7223 7344 121 1.7%
90+ 2538 2687 149 5.9%
Total 1,339,345 1,334,365 -4980 -0.4%

Premium income
Premium income for the June 2014 quarter totalled $298 million. This was up $3.8 million or 1.3 percent on the March 2014 quarter. Annual premium for the year ended 30 June 2014 was $1.172 billion, up 5.3 percent on premium income for the June 2013 year.

Claims paid
Claims paid for the June 2014 quarter totalled $250 million, up 1.8 percent on claims paid in the previous June 2013 quarter. This is the second-highest level of claims paid for a quarter on record. The highest recorded claims paid for a quarter was in the September 2013 quarter, with $256 million in claims paid. Claims paid for the 12 months ending 30 June 2014 were $967 million, up 7.0 percent on June 2013 year claims.

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 this year, underpinning the valuable contribution health insurance makes to total health spending.

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