News

Time to Scrap Contracting Once and for All

The Australian Medical Association today advised health funds to abandon contract-based gap insurance schemes in favour of no-contract products following the passage through the Senate today of landmark health insurance legislation.

The legislation will, for the first time, allow funds to offer members no-gap and known-gap health insurance products that are not based on contracting between health funds and doctors or hospitals and doctors.

AMA Federal President, Dr Kerryn Phelps, said that contracting had proved a failure and it was time for the Federal Government to scrap all forms of contracting as the basis for gap insurance products.

"If the funds want to add value to private health insurance, they need to develop and promote known gap insurance products that are not based on contracts," Dr Phelps said.

"Patients should now be asking for no-contract gap products. No-contract means no interference.

"The AMA has strongly opposed contract-based gap insurance because contracting is the gateway to managed care - a US practice that puts health fund administrators in control of doctors. By controlling doctors, they can maximise profits by cutting care.

"Since the passage of the so-called Lawrence legislation in 1995, health funds have been able to offer known gap or no gap health insurance products but only where a contract exists between health funds and doctors.

"But five years later, less than 10% of in-hospital private medical services have been provided through contracting schemes. It is time for the Federal Government to admit the Lawrence legislation is a failure and scrap it.

"We can't expect to see any progress unless the funds back no-contract products.

"The AMA will now rank gap insurance products against a standard set of criteria so that the public can get an independent assessment of the merits of each product. The AMA will also monitor the performance of the funds.

"Time will tell if this legislation is a breakthrough for doctors, patients and the health funds," Dr Phelps said

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