He is ideologically opposed to the fund merging with a for-profit health insurance fund. RT Health is a mutual founded 129 years ago by unionists pooling their resources to protect each other against sickness and injury.

His letter to the chairman of one for-profit fund says: “If RT Health members vote for a for-profit option, the RTBU will recommend that its members collect any payment they are entitled to, and cancel their membership with RT Health and join another mutual.”

Diamond’s letters are extraordinary in their audacity as only about 11 per cent of the members of RT Health are members of the RTBU. He did not respond to a message left by Chanticleer at RTBU headquarters seeking a comment.

A merger with a for-profit fund would involve the demutualisation of RT Health and a payment to each member. The $90 million in capital it has built up over the generations of different members would be replaced with private capital.

It is believed the distribution to each member of RT Health would be about $3000. This would no doubt come in handy during the COVID-19 recession.

The move by the RT Health board to seek a merger partner is in keeping with the encouragement given to the industry in several pointed speeches over the past two years by Australian Prudential Regulation Authority member Geoff Summerhayes.

Summerhayes has been beating the drum about the poor economics in health insurance because he is worried members will ultimately suffer when funds are forced to merge or be wound up.

In a speech in February 2018, he said that “as the inter-related challenges of affordability and adverse selection bite ever harder, APRA is looking closely for signs that insurers may breach prudential standards or become unsustainable”.

“Our past experience across industries suggests smaller entities that lack the scale and resources of the multibillion-dollar industry giants are often most at risk,” he said.

“If necessary, we will act decisively to protect beneficiaries and the industry as a whole from the harm a failure would cause, including by enforcing wind-ups or mergers.”

In a speech in February this year, Summerhayes stepped up his efforts to force change in the health insurance sector by calling on the federal government to give APRA the directions power to force mergers of sub-scale funds and hold an independent inquiry into private health insurance.

“APRA believes that all key policy and regulatory settings should be up for discussion. These include the ongoing viability of the community rating model, what services can be covered, the way premiums are set, and the way prices are set between PHIs and medical providers,” he said.

But there has not been a word out of the federal government in response to this request other than an attack on APRA by a Liberal backbencher claiming it was overstepping its remit.

The office of federal Health Minister Greg Hunt did not respond when asked for a comment about the merger stand-off between the board of RT Health and the union.

The directors of RT Health decided to seek a merger partner after analysing all the headwinds facing the health insurance sector, including the need for the latest technology systems and the capital to expand into adjacent areas to attract new members.

It is notable that a director of RT Health is Bruce Mackie, who is an executive officer of the RTBU Queensland branch.

The RT Health financial accounts for the past four years show a fund with negligible growth and a sub-scale membership base. RT Health did try to build its own state of the art tech platform but it failed and this triggered an impairment of about $1 million.

With the growth in health insurance premiums capped at a level almost half the level of growth in hospital expenses, there is an overarching imperative for private health funds to be able to take advantage of economies of scale.