AMA Submission on Risk Equalisation in Private Health Insurance

The consultation paper does not have patients, and the broader value they derive from the private health system, at its core. The focus seems much more about ‘preserving incentives for insurers to control costs’ or ‘incentivising insurers to operate efficiently’ to improve affordability. The real value proposition and the reason people choose private health insurance (to gain quicker admission to health care, to have a choice of doctor and choice of hospital and access to a wider range of treatment options) is lost. 

The AMA has called for, and welcomes, meaningful research and review which aims to make our private health system better able to provide sustainable quality health care into the future. However, the proposed shift to prospective risk equalisation outlined in this consultation will likely help insurers minimise costs, but it will achieve this by creating a system which may reduce patient choice and the clinical autonomy of doctors. As such the AMA does not support a move to prospective risk equalisation, and especially as we do not believe there are appropriate safeguards protecting patients in place. 

The AMA does not believe the implementation of a wholesale change as this one can be adequately managed in the absence of a fit for purpose policy and regulatory framework. Our current system has gaps in knowledge, in evidence, and in regulation, all of which ultimately impact the patient through unexpected out-of-pocket costs, reduced clinical outcomes and the development of a system that is difficult (and in some cases near impossible) to navigate.  

The AMA does not support a move to prospective risk equalisation without adequate safeguards for clinical independence or a fit for purpose regulator ensuring that the patient is central to the management of the private health system.