Alarm bells ring on bellwether private maternity hospital places

Closures of private maternity units and shortages are a threat to the long-term viability of private health insurance, which must attract younger and healthier members, who believe they are getting value for their premiums.

AMA President Professor Steve Robson has warned that maternity care is the canary in the coalmine for private health insurance.

He told the Medical Republic this week that the impending closure of private maternity hospitals, including Geelong’s Epworth maternity unit, rang alarm bells for the longer-term viability of private health insurance.

“We know that two massive drivers of the uptake of private health insurance by young people are maternity and mental health,” he said.

“If people say, ‘well, there is no point in taking out private maternity cover because there are no private maternity services available’ or it’s out of our reach, that driver for taking out private health insurance is gone.” 

Without the cohort of younger and healthier people paying private health insurance premiums, the insurers are left with an ageing customer base, who are more likely to require costly joint replacements or cardiac surgery.

Professor Robson said, “Young people need to get something out of it and say, ‘this is valuable, I had a good experience having a baby’ and I will keep paying my premium so that when my kids need their tonsils out or their grommets in, we will be able to have it done privately”.

The state of private health funds was the media focus last weekend with the Daily Telegraph publishing articles showing that health insurers had raised more in premiums and had paid out less in benefits while Australians were facing two premium rises in just five months.

Professor Robson said on 2SM that private health policyholders were getting confusing messages from soaring profits and cuts to benefits.

“We have seen over the pandemic period that private health insurers have been able to squirrel away a large amount of money and Australians are looking at the value they get and are left scratching their heads when they see big increases in premiums,” he said.