HBF warns of premium rises

WA's biggest private health insurer is warning premiums could rise if there was a surge in people who downgraded their policies by agreeing to pay more in excess if they go to hospital.

HBF managing director Rob Bransby said though modelling suggested a 3-5 per cent dropout rate because of the new means testing of Government rebates, the great unknown was "product slide", which could have a big effect on the not-for-profit group.

His bigger fear was that many people would shift to higher-risk policies with an excess or co-payment to save on premiums.

Just over half of all West Australians have hospital cover.

Mr Bransby said if thousands opted to downgrade, it would create a smaller pool of money to cope with a bigger proportion of chronically sick people who were the bigger users of services but the least likely to downgrade their cover.

His comments come after the passing of legislation by the House of Representatives which will see a means test apply from July 1, reducing the 30 per cent rebate for people earning more than $83,000 and families earning more than $166,000.

The rebate will cut out for those earning more than $129,000 and families on incomes greater than $258,000.

With the Bill's passage in the Senate now assured, Mr Bransby said he had accepted the decision but only time would tell what impact it would have on membership and the health system as a whole.

"We will keep a close eye on what happens after July, and it's not just the dropout rate or people dropping their ancillary cover that will have a big impact but also the product slide on hospital cover," he said.

"That could affect prices and cause a spiral effect of people dropping out or changing their cover."

Despite claims this week health funds were enjoying record profits because of a 0.1 per cent rise in people with cover over the past 12 months, Mr Bransby said unlike banks or some sections of the industry, HBF was a not-for-profit organisation. "We put money back into our fund so our concern is not about profits," he said.

Insurers might need to look at how they bundled ancillary cover to adapt to changing market needs because of the means test, he said.