Not-for-profit health insurance: exploding the myths

Raise your hand if you can explain what a not-for-profit health fund is. Could it be some kind of charity – or worse, a cult?

Is it one of those organisations for people with obscure jobs? Or is it a meaningless term anyway, since all health insurers are virtually identical?

If you’re getting lost in the misconceptions around not-for-profit health funds, read on.

Myth #1 All not-for-profit health funds are the same
Yes, health funds can seem all the same from the outside, but I can assure you that they’re all different in their own ways.

One health fund that is a standout for us is HBF a not-for-profit health insurer, which also recently came out on top as to how well it is supporting customers during COVID-19 – The ultimate proof: in 2020, it was the only major health fund to cancel its premium increase (while other funds merely postponed it for 6 months).

“This is possible because we’ve reduced our operating costs, clamped down on fraudulent claims, and we’ve grown our investment income. And of course, as a not-for-profit insurer, we have no shareholders to pay,” explains CEO John Van Der Wielen.

HBF is the only large health insurer in Australia to cancel its premium increase for all its members. Photo: Getty

Myth #2 Only employees from certain industries are eligible to join a not-for-profit fund
Sure, that may be the case for some insurers, but not for HBF which has been successfully operating for 79 years and is one of the largest not-for-profit health funds in Australia and is open to everyone.

Myth #3 – Not-for-profit means the health fund doesn’t make a profit
In today’s society, we’re taught to believe that profit is a good thing – in which case ‘not-for-profit’ doesn’t sound very tempting at all, does it?

And just like that, the curse of confusing terminology notches up another goal. The fact is, it’s not that not-for-profit health funds don’t make a profit, it’s what they do with that profit that sets them apart.

A not-for-profit health fund uses the money it makes to provide access to health services for members and cover its running costs, without a percentage being paid out to shareholders or other investors.

In the case of HBF, profits are also used to improve services for its members and provide community grants.

The fact is, it’s not that not-for-profit health funds don’t make a profit, it’s what they do with that profit that sets them apart. Photo: Getty

What difference does that make to HBF members? Well, with one less mouth to feed (so to speak) there’s more left in the pot, which contributes to keeping premium increases to a minimum.

“I know that many Australians are concerned about the affordability of health insurance,” said John Van Der Wielen, CEO of HBF.

“The rising cost of health services and the ageing of our population is meaning insurers are having to pay far more in claims, but HBF is determined to keep premium increases to an absolute minimum. In 2019, our increase was by far the lowest of the major funds – an average increase of just 1.9 per cent, and you can compare that to three and a quarter per cent for other funds.”

In 2020, in response to COVID-19, HBF went one better being the only large health insurer in Australia to cancel its premium increase for all its members.

The more accurate term might be “for members, not shareholders”.

So, ask yourself, would you prefer your health fund to reward its shareholders, or put you first? As if the answer weren’t already obvious, Visit hbf.com.au/health-insurance and compare HBF’s hospital and extras covers.