MORE than 250,000 people in NSW will get a break from the economic gloom, with payouts of up to $8800 as a result of health-fund mergers expected to be approved before Christmas.
Takeover bids have swept the health insurance industry in the past year, and the latest likely beneficiaries are members of target funds based in NSW: Australian Health Management and Manchester Unity.
The 160,000 members of AHM will receive all of the $367 million that Medibank Private is paying to acquire the Wollongong-based fund, if members vote this month to accept the deal with the health insurance giant.
Individual payments based on type of cover and years of membership will mean long-time members will receive as much as $8800.
Manchester Unity's members are to vote next month on whether to accept a $256 million offer to merge with a much bigger fund, HCF. A vote in favour will deliver members an average payout of $3000 and a maximum of $7640.
But another demutualised fund, NIB, has gone against the trend. Its board rejected an offer from a mystery bidder that valued the fund's shares at twice their current market price.
This drew an angry reaction from shareholders at the annual meeting this week, which also heard that the chief executive, Mark Fitzgibbon, was paid $2.3 million last financial year, about five times the net profit.
The funds say that mergers will help them improve benefits for members and increase national competition between the big players in an industry which until recently had only one truly national fund, the Government-owned Medibank.
Medibank says its takeover of AHM will benefit its existing 3 million members because they will progressively get access to AHM's widely recognised health management programs, which focus on prevention and patient education to improve health outcomes and reduce medical costs.
Private health insurance is expected to gradually move from its focus on hospital care to alternative schemes that focus on supporting patients with chronic illness to stay at home.
The latest merger plans follow the amalgamation of the BUPA and MBF, which produced a national health corporation that relegated Medibank to second place for the first time in years.
The previous government had planned to sell Medibank this year if it had retained office and had dismissed demands that it return all the purchase price to the members, who, some said, were the real owners of the fund.
A health policy consultant who was an adviser to the previous government, Terry Barnes, says the Medibank purchase of AHM raiseS the question of why that was legitimate for the Government-owned fund when Labor had refused to allow the sale of Medibank.
Mr Barnes said it appeared the Finance Minister, Lindsay Tanner, wanted to ensure Medibank remained the biggest fund, given that the purchase of AHM restored it to No. 1. "To Mr Tanner, size is everything."
The emergence of big, competing funds, was inevitable if health insurance was to flourish in a difficult political and financial environment.
Mr Barnes predicted that the number of funds would drop from the present 32 to about 15. "They will have to merge or die," he said.