What we're doing to help keep premiums affordable
Premium affordability continues to be a concern for our members. Here are some of the initiatives to help keep your future premiums affording.
Strengthening our Affiliated Provider programme
Affiliated Providers are doctors, specialists and facilities that provide healthcare services for members at agreed prices. Making some healthcare services ‘Affiliated Provider-only’, negotiating agreed prices, and partnering with more Affiliated Providers is one way we help to manage rising healthcare costs. We now have the support of over 1,900 Affiliated Providers across 20 specialties nationwide (as at Nov 2017). The programme helps keep rising costs in check and makes claiming and payment faster and easier for members. It has now been effective in saving around $35 million dollars this year.
Recovering costs from ACC
We have a team dedicated to helping members who claim for healthcare services through ACC but are declined. In the 2016/17 financial year, we helped 320 members with ACC reviews, which resulted in Southern Cross receiving reimbursement of $4.7 million for both treatment injury and accident related surgical costs from ACC for claims it had previously declined.
As well as helping to ensure treatment costs are met by the right insurer, this helps members because they may have other entitlements under ACC, such as earnings related compensation, rehabilitation and home help.
Regular plan reviews
We are committed to our vision of a healthier Society, and continuing to provide affordable health insurance to as many Kiwis and Kiwi businesses as possible. This means maintaining a healthy balance sheet.
As a not-for-profit Friendly Society we are owned by – and exist for – our members.
We know that premium affordability is a concern for our members. And we know that members value both the day-to-day use of their insurance, and the peace of mind that comes with knowing that the ‘big stuff’ like cancer or other life-changing diagnoses are covered. Without these changes, we would have to increase premiums at a higher rate.
While we recognise the changes may present challenges for some members, we believe this is the right thing to do for our membership as a whole.
- It’s important we continue targeting a rate of claims at 89c to every $1 in premiums received.
- Last year we paid 92c in claims for every $1 received in premium. We reimbursed members for claims ranging from the small and everyday costs right up to six-figure sums for healthcare services. We are proud of how much is returned to members in claims, and that we carefully manage operating expenses.
- Health insurers paid out a record $1.2bn in claims last year and Southern Cross Health Society paid out 74% of that amount despite only having 62% market share. That’s great value for our members.
This Policy Update is part of a longer-term strategy of premium affordability through moderating claims costs. This step is challenging, but we believe it’s the right thing to do for the whole of the Southern Cross membership.
That’s why the Policy Update includes changes across plans, impacts members across different age groups, and addresses claims costs specifically.
This means, for example, introducing new limits or caps on some benefits. The benefits identified are those where the number or value of claims in a year from a small number of members are either;
a. well outside what makes the benefit sustainable to offer,
b. well outside what the collective membership would reasonably expect that benefit to cover.
Improving premium affordability for our older members
From 1 November 2016 we began phasing in a change to Southern Cross' common rating to move it from age 65 to age 75 (please note, when we refer to ages here, it means the age of the member at the policy anniversary date). This means that each year for the next 10 years the common rating age will increase by one year, so that by 2026 the common rating age will begin at 75.
Members already common rated (ie those who were 65 or over at 1 November 2016) saw no change and their premium was unaffected by this change. However premium levels may still change for reasons other than age as they reflect the total claims made by all members receiving the common rating. The rates charged for different plans take into account current claims levels and the actuarially projected use of benefits in the coming year.
Those already age 65 years or over who keep their health insurance through to age 75 will not be disadvantaged by the change. What they will pay in premiums will be similar to those moved to the new common rating.
We’ve taken an approach that is as fair as possible and does not disadvantage members who are already on the common rate. Doing it this way means that members who maintain their insurance through to 75 will have paid similar premiums, regardless of the age which they started on common rate.
Increasing online services
We’ll continue to invest in online services such as My Southern Cross and the app, so we can encourage policyholders to self-serve by applying for approvals, managing payments, claiming online, receiving paperless communications, and more – reducing our operating costs in the long term.
Actively promoting better health and wellbeing
We actively promote better health and wellbeing for our members through corporate wellness schemes and our Facebook page in the aim of preventing healthcare problems like diabetes and heart disease – that means a healthier society, and less claims.