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Southern Cross surge in claims unsustainable

Wednesday 15th September 2010 2 Comments

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Southern Cross Medical Care Society reported a $7.1 million deficit after dipping into its reserves to help cope with a 7% rise in health-care claims and said its payout ration is "unsustainable". 

Claims rose to a record $562 million in the year ended June 30, while premium income was $597.3 million, the society said in a statement today. It returned more than 94 cents of every dollar in premiums, processing 555,000 claims including 150,000 elective surgery procedures.

"The significant year-on-year increase in healthcare costs is an issue faced by governments and healthcare funders the world over," said chief executive Ian McPherson.

"While our 94.1% claims-to-premiums ratio represents outstanding value for our members, it is unsustainable long-term."

The society plans to increase its use of its Affiliated Provider programme, where it contracts with healthcare providers for services at a fixed cost, such as surgeons and specialists. It will also lobby the government to introduce tax rebates on premiums for those aged over 65 and seek removal of fringe benefits tax on employer-subsidised health insurance.

In the latest year, more than 25,000 of the society's 842,000 members downgraded their policies to reduce premium costs, 33% more than in 2009.

Downgrades were most common among those aged over 65, who make up 11% of the society's members though 35% of claims.

Southern Cross has 60.6% of New Zealand's health-insurance market.

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Comments from our readers

On 15 September 2010 at 2:38 pm Ray said:
Over 65's may well be only 11% of the menbership but they pay a penalty premium because of that. 35% of claims yes, but at least that if not more in contributions. Southern Cross needs to show more honesty in how they present their information so as not to suggest that over 65's are paying less that there fair share.
On 15 September 2010 at 10:34 pm Graeme said:
Do Southern Cross policy holders realize the extent to which the Affiliated Provider scheme they are implementing means limiting their choice - the insurer will now decide who treats them?
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