Medibank
Private is as good as on the market, with the Government hoping the sale will
put a billion or so into its pockets. But what about the policy holders? Labor’s
warned about premium increases. There’s more, though, than that at stake with
this sale.
When
similar organisations have been demutualised, contributor members have been
given cash or shares in the new entity as a means to deal fairly with the
problem of accumulated cash reserves.
Medibank
Private also enjoyed a significant capital injection of many millions from the
Government when it was corporatised. That has been more than repaid by the
annual profits passed back to consolidated revenue.
Yet the
insurer has significant reserves as a prudential hedge against future demands
on payouts. All of that comes from member contributions – and should be returned
to members. And there
are plenty of members. Let’s not forget that this is the nation’s largest private
health fund. It has almost three million people on its books.
Jack
Waterford comments in The Canberra Times today:
At any one time, Medibank Private is holding
nearly $1 billion in cash – so that it can efficiently pay out claims made by
its contributors. It has reserves, of “shareholders’ funds”,
totalling more than $600 million – the money put aside for future claims…What Medibank Private has, in fact, consists
almost entirely of what has been put in by its contributors. The Commonwealth
owns Medibank Private, but it has never contributed anything of any substance
by way of operating capital; it has never needed to. It has certainly received
back, in dividend payments, many times more than it has ever put in.So far as the Minister for Finance, Nick
Minchin, is concerned, however, Medibank Private is in no sense a mutual
insurance fund. In no sense is it owned by its customers…
Three
million customers. All with an interest in the outcome of the sale. Waterford warns it could all get very messy,
pointing to overseas demutualisation litigation.
Just the
electoral arithmetic should be cause for concern. Yet, as Waterford observes “From
Labor, alas, one can expect only rhetorical ideological flourishes against
privatisation – not the real issue here.”
Perhaps it’s time for a redhead to show how red-hot she can be.
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