The EY Australian Private Health Insurance Update for 2022 provides EY’s perspectives on the recent performance of the Private Health Insurance (PHI) sector. EY Port Jackson Partners produced the update which was jointly authored by David Harrington – our insurance strategy partner and Warrick Gard – an actuarial partner from EY.

The update provides context for recent performance including a review of industry developments in PHI Industry Structure, and PHI Policy and Adoption. It finds that the private health insurance sector performed well over the last 5 years with a stable market structure, strong tail winds from COVID, growing levels of adoption and high gross margins. However, EY predicts the next 5 years will be tough with concerns about reversion to longer term declines in participation, rate caps that will put ceilings on premium growth, transition to new APRA capital adequacy changes impacting ROE, inflationary pressures on health costs, and risks of a recession accelerating families transitioning to basic covers.

The update explores opportunities for further industry innovation that could benefit policyholders, healthcare providers and funds. These include:

Changes to what can be expensed within HIB would encourage further service innovation.

A care coordinator role would support the customer to navigate through the treatment pathway, ensure all data follows the patient through the treatment journey, and ensure that treatment options are transparent, and evidence based. However, cultural changes including challenges by the AMA and Specialist Colleges may be needed to enable third parties to act as a care adviser when dealing with health services.

New models including home care, and value-based payments could dampen health cost inflation and improve health outcomes. You can read it here.