Skyrocketing profits for insurers have been branded "obscene" by sections of the health industry, coming just months after health funds secured another government-approved increase in premiums well above inflation.
Health funds made post-tax profits of $1.3 billion in the year to April 1, an annual increase of 18 per cent.
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That followed quarterly profit increases of 11.5 per cent and 28.5 per cent, according to figures released by the Australian Prudential Regulation Authority.
Private Healthcare Australia, the peak body for insurers, conceded the numbers showed "good profitability" across the sector.
The group lobbied hard for the latest 4.8 per cent increase in premiums to battle what it called the "relentless upward curve of health inflation".
In 2016, the government waved through a 6 per cent increase, with premiums rising a cumulative 28 per cent since 2012.
PHA chief executive Rachel David said regulators, including APRA, the Australian Securities and Investment Commission and the Australian Competition and Consumer Commission, had determined that profit levels of health funds were "appropriate".
"Profitability is good but the sector is also heavily scrutinised by APRA, ASIC and the ACCC. They have a lot of insight into data and reporting," she said.
There is evidence that some people are putting off elective surgery to protect their jobs in an uncertain economy and public hospitals are treating more private patients to raise revenue for states, she said.
Total premium revenue for health funds in the period was $22.8 billion and they held on to $3.4 billion after paying out claims, which Dr David said was a higher pay-out proportion than the general insurance sector.
But a number of groups representing doctors, surgeons and device makers went on the attack on Wednesday.
Australian Medical Association president Michael Gannon said the figures made it "time for some serious questions" about the system.
"Australians are openly questioning the value of private health insurance, complaining about the out-of-pocket costs, increasing number of conditions, caveats, carve-outs and proliferation of junk policies," he said.
"You can understand why people are getting angry at the profits ending up in the pockets of overseas shareholders."
The Australian Society of Ophthalmologists, representing eye surgeons, said the corporate structure of privatised funds such as Medibank, NIB and Bupa was pitting players in the industry against each other in the pursuit of higher financial returns.
"It's absolutely obscene when you see the profits they're making and the effect they're having on health," said ASO president Michael Steiner.
"They're trying to control health, doing deals with hospitals and cutting other hospitals out, doing deals with some surgeons and cutting other surgeons out, to drive down prices they pay."
The private health insurance industry has pushed hard against device makers for putting upward pressure on premiums.
But Medical Technology Association of Australia chief executive, Ian Burgess, said the "massive level" of profit called into question those claims, particularly given the $6 billion public subsidy the health insurers receive via the private health rebate.
Fairfax Media asked the three regulators for a response to the industry's claims that profit levels were at "appropriate levels" but they all declined to comment directly.
In its 2016 annual report APRA said: "The private health insurance industry continues to be in a strong prudential position to meet its obligations to policyholders. Private health insurers hold assets well above the minimum capital adequacy requirement."
Health Minister Greg Hunt said: "I know that every single dollar matters to Australian families and keeping private health insurance affordable is a priority. I want to work together with the states and territories to find a solution to take pressure off private health insurance premiums."
Shadow health spokeswoman Catherine King said the privatisation of Medibank had not increased competition or put downward pressure on premiums as the government had promised.
"Almost a third of private health insurance profits come from taxpayers via the private health insurance rebate, so the government should make sure that every dollar is spent wisely," she said.