Health insurer begins check-up on aged fees

Dr Terry Creagh is paying $5000 a year for health insurance for him and his wife. Photo / Paul Estcourt

New Zealand's most powerful medical insurer is searching for new ways to keep a lid on premiums for the elderly.

Throughout this year, Southern Cross Health Society is investigating changing its model so its most loyal members, who are also its most expensive claimers, are not forced to quit their policies.

Soon, the society may give the public an insight into the scope of its investigation, which has just begun.

People like the Rev Dr Terry Creagh of Pt Chevalier are fighting big charges, saying couples' premiums of $5000-$11,000 annually are punitive for the most medically and financially vulnerable.

An unlikely activist and critic, Bruce Sheppard - the accountant and one-time Viking horn-wearing Auckland shareholder agitator - forced the society to examine ways to stop penalising policy holders aged 65-plus. He is now part of the team investigating the changes.

But the society says its high premiums for members aged 65 and over reflect risk and it cannot push up younger members' fees for fear of driving them to cheaper insurers.

Some say rising medical charges and exorbitant specialists' and private hospital fees are to blame.

Peter Tynan, the society's chief executive, said membership numbers were up from 780,431 in the 2001-2002 year to 835,385.

He defended the society's fees and said there were 22 health insurance plans with 105 variations, the largest range in New Zealand.

"We aim to have a range of plans designed to suit all budgets and levels of coverage. They include comprehensive plans such as UltraCare 400 - providing cover that ranges from GP visits and surgery to dental care and contact lenses - to KiwiCare Budget, a shared cover plan, with a $100 excess per claim and providing cover for surgical treatment, medical hospitalisation and associated treatment," Mr Tynan said.

The society acknowledges that changes are needed and investigated medical tourism, a move which a survey found was unpalatable although cost savings could be made.

The society has ushered in an affiliated provider scheme, negotiating with specialists to cap fees and referring members to a select few, in some cases. Southern Cross says that means an easier prior approval and claiming process.

Since October, intravitreal injections, Mohs surgery, PET scanning and prostate surgery are reimbursed by the society only when an affiliated provider is involved.

The problem
* About 1.3 million New Zealanders have medical insurance. This eases the public health spending burden.

* 835,385 (60 per cent of those insured) are with Southern Cross.

* 90,000 society members are aged over 65, paying big premiums and upset about the high costs.

The options
* A year-long investigation into reducing premium rises for policyholders aged 65+.

* Bigger price-banding premium charges so costs are spread over wider age range.

* More restrictive policies to limit claims for only certain procedures and operations.

* Tax breaks: the insurer has been lobbying Government, pleading for members to get deductions.

* Reverse mortgages: older, poorer members might borrow against their house to pay premiums.

* Medical tourism: sending Kiwis overseas for surgery. Research prompted this to be ditched.

* Affiliated provider scheme, already introduced. A select number of specialists offer set fees.

Details of a big Southern Cross shakeup are expected late this year.