Nicola Roxon got the headlines she wanted on private health insurance premiums:

The Oz: Roxon knocks back big health fund rises

The AFR: Labor blocks health fund price rises

The Age: Roxon holds tough line

The Telegraph: Kids forced to eat whale

Wrong, wrong, wrong and, um…

Roxon – and her press release was quite clear on this – hasn’t done anything more than ask some funds to make sure the premium increases they have sought are “as low as possible”, and to provide more detail about the cost pressures driving the applications. But the bulk of increases sought by funds have been approved. It is also unlikely that the funds that have been asked to check their maths – and no one is saying who they are or how many – won’t also have their increases approved.

But in the interim, Roxon gets to look like she’s holding the line in the National War on Inflation. And doubtless Labor is aware of the problematic headlines Tony Abbott regularly faced whenever he approved premium hikes, although Abbott eventually took to claiming that “premium rises, like any interest rate increase, would always be less under a Coalition government than under any alternative.” When you’re on a good thing, stick to it, eh?

The Government has a central role in this because private health insurance is about the most closely regulated industry in the country, and because the private health insurance rebate pumps $3b+ a year into it. This isn’t an adversarial relationship, with the Government stoutly defending the interests of health insurance consumers. The Government is a partner of and major investor in the industry. Health Ministers would almost certainly prefer that the Private Health Insurance Act didn’t require them to approve each and every premium increase, but given the extent of government involvement in the sector, that’s not going to happen.

And for all her inflation-fighting rhetoric, Roxon has been careful to emphasise the funds’ legal obligations in areas such as capital adequacy. Private health funds don’t have a great deal of control over their major source of expenditure, the benefits they pay out to members, which went up nearly 9% last year. And they have to ensure they are able to meet likely future calls on their funds. It’d be a brave minister who would risk the solvency of a fund by denying an increase, regardless of the political impact.

But for the moment, thank to the country’s sub-editors, Roxon has managed to square that particular circle.

Peter Fray

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