The Government will bring back legislation passed by then-treasurer Mike Baird in 2013 when the same insurers refused to pay the correct single room rate.
The decision follows four months of negotiations that have not yet produced a result.
In the last financial year, the single room rate was gazetted at $892.
- HCF is only paying $463. This costs NSW Health $40.5 million per annum.
- NIB is only paying $491. This costs NSW Health $17.6 million per annum.
- Bupa is only paying $501. This costs NSW Health $35.8 million per annum.
- Medibank is only paying $515. This costs NSW Health $33.4 million per annum.
The refusal of some private insurers to pay the correct rate is estimated to cost the public system close to $140 million a year overall.
Since insurance companies stopped paying the correct rates, profits have more than doubled. In 2022-23 alone the industry recorded a $2.2 billion profit, a rise of 110 per cent from the previous year.
At the same time the proportion of premiums they return to their customers has fallen from 88.03 per cent in 2019-2020 to 82.61 per cent in 2022-23.
44 of 53 private health insurers are either already paying the correct rate or have now agreed to resume paying after discussions with the NSW Government. This includes Teachers Health, Nurses and Midwives Health and Emergency Service Health.
The four biggest funds who are still holding out have a combined share of 74 per cent of the private health insurance market.
Since June, the NSW Government has sought to resume the longstanding arrangement with private insurers, which dates back more than 40 years.
As recently as a fortnight ago, the government wrote to the major funds seeking final clarity on whether they will pay for private patients in public hospitals.
The money they are robbing from the public health system could be used to hire up to 1,000 additional nurses, to build a new rural hospital or to reduce the elective surgery wait list by thousands of patients.
The Government commends those funds who continue to pay the gazetted single room rate and will continue to work with them.
Treasurer Daniel Mookhey said:
“Mike Baird was right 10 years ago when he demanded the insurers pay their fair share, and we are right to enforce that agreement now.
“It is unfortunate that it has come to this – but the insurers can resolve the impasse by paying their bills.
“My door remains open for the insurers to do the right thing.”
Minister for Health Ryan Park said:
“These private health insurers already receive a substantial subsidy of the public hospital beds their members use, they should just do the right thing and pay their fair share.
“At a time of soaring healthcare costs, private health insurers rorting NSW public hospital beds is simply unacceptable.
“Every dollar being ripped out of the public health system by private insurers is a dollar that could go to patient care, new hospitals and hospital staff.”
