Southern Cross CEO Peter Tynan argues how much an insurer pays out in claims is more important than the dollar limit it'll pay up to

Southern Cross Health Society responds to an interest.co.nz story, which compared what you get for what you pay when it comes to health insurance.

This is what Southern Cross Health Society's chief executive, Peter Tynan has to say: 

There are hundreds of different types of health insurance policies available in New Zealand, which can make it hard to know which policy suits you best – particularly when you don’t know what you might end up using your health insurance to cover.

Comparison websites for example often place emphasis on the dollar amount that policies will cover up to, like $300,000 per year for surgical procedures. But really this tells a very small part of the story. These upper limits are illusionary benefits for consumers. As the largest most experienced health insurer, we’ve never had a claim close to $200,000 let alone $300,000.

In the last two years Southern Cross has funded 362,000 surgical procedures and just four members had a surgical claim above $100,000. Even though these four claims account for just 0.001% of all those paid – this $100,000 limit is frequently touted as insufficient and a major downside of Southern Cross policies. For this reason alone, the business is considering increasing it.

We set our limits based on industry knowledge. We pay 72% of the country’s health insurance claims, so we have a significant amount of data on what healthcare actually costs and what people actually claim for. Our policy benefits and limits are constructed with this knowledge in mind.

Policy limits aside, what I think is more telling when comparing insurers and the ‘value’ they offer is how much they pay out in claims.

During the year ending June 2014, for every dollar Southern Cross received in premium income, 90.4 cents was returned to members in claims for healthcare services. Though we don’t believe in profiting from Kiwi’s poor health - in the same time period, our for-profit competitors paid only 63.2 cents on average for every dollar they collected in premiums. Clearly, Southern Cross members are getting better value for every dollar of premium paid.

One of the other bug bears of Kiwis with health insurance is feeling like they are being sprung with payments above their policy limits that they didn’t expect. And that’s something we are addressing through our Affiliated Provider programme.

Affiliated Providers are surgeons, specialists and facilities that are contracted to provide Southern Cross members with certain procedures at agreed prices, and who take care of the prior approval and claims processes for members.

And it’s worth pointing out that Southern Cross isn’t the first to do this. We are following a pretty well-trodden path. Contracting with providers is utilised by insurers in Australia, America, the UK and also by the ACC.

The Affiliated Provider programme has been running for 17 years, and now accounts for more than 40% of all claims costs. We’re aiming to grow this to 60% next year.

With the Affiliated Provider programme a member knows up-front how much, if anything, he or she has to pay towards their care and they can be confident that prices are capped at a reasonable rate. This typically means no more than 20% co-pay on a shared-cover plan and no payment for those on comprehensive policies.

A person’s health and vulnerability shouldn’t be exploited to provide profits for shareholders; we are proudly a member-based not-for-profit insurer.

Our members are at the heart of what we do. We are determined to provide the very best value in healthcare that New Zealanders can receive. We see it as our duty - that’s the difference with Southern Cross.