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Incentives to keep patients healthy in health fund sights

13 May 2014

Health funds are pushing to be allowed to pay doctors incentives to keep patients healthy and out of hospital as part of an expansion of private insurance to cover primary health care.

As experts warn that a Commission of Audit proposal to force higher income earners off Medicare and into private cover would drive a massive increase in premiums, peak industry group Private Healthcare Australia is planning a major expansion into primary health.

According to the West Australian, PHA is preparing to submit a reform blueprint to Health Minister Peter Dutton that will include allowing health funds to pay GPs to provide preventive care services to their patients.

Under current arrangements, private health funds are banned from providing cover for GP services, but Mr Dutton has expressed interest in an expanded role for insurers, including in primary care.

The PHA’s plan would see doctors paid an incentive by health funds to help improve the health of their members, including by providing advice on diet and exercise, the West Australian reported.

They might also receive payments for treating patients in accordance with clinical guidelines.

PHA Chief Executive Michael Armitage told the West Australian that often, the first health funds knew that a member had a serious condition was when they were presented with a large hospital bill.

Mr Armitage suggested the incentive arrangement could improve the quality of care while reducing health fund costs.

But an analysis by health insurance actuary Brent Walker suggests private health cover might be pushed out of the reach of many if recommendations from the Commission of Audit are adopted.

In recommendation 17, the Commission suggests that higher income earners be excluded from Medicare and required to take out private health insurance, which would then have to cover GP visits, pathology and pharmaceuticals.

Mr Walker told the Adelaide Advertiser that to extend private health insurance to cover all the expenses that currently fell under Medicare would force premiums up by around 150 per cent, putting the cost of a typical health plan at $13,500 a year.

The warning came as it was revealed that some health funds are charging up to $2772 a year for insurance that only covers patients for public hospital care – an entitlement they already have under Medicare.

The Sunday Herald Sun said there were 15 such policies on offer in Victoria alone, and they did not confer any advantage in terms of treatment priority or getting access to a single room. Policy holders may get a choice of doctor, but only of those who have practicing rights at that particular public hospital.

A spokesman for insurer NIB admitted to the Sunday Herald Sun that its public hospital-only product was aimed at higher income earners who were trying to avoid the tax penalty on those without private health cover.

Adrian Rollins

Published: 13 May 2014