Looking at the ongoing value of private health insurance
AMA SECRETARY GENERAL ANNE TRIMMER
One of the reviews instigated by former Health Minister Sussan Ley is the work underway by the Private Health Ministerial Advisory Committee (PHMAC), chaired by Dr Jeff Harmer AO. The PHMAC is tasked with examining several issues relevant to private health insurance. It was established by Minister Ley to look at the ongoing value of private health insurance (PHI) in the context of rising premiums, and followed a consumer survey in 2015, which received around 50,000 responses.
The main concerns identified by consumers were that:
- insurers do not pay an appropriate level of benefits for treatment (71 per cent);
- premiums are not affordable (58 per cent); and
- PHI does not cover the full range of services (44 per cent).
The PHMAC’s initial work has been to look at product design in line with the simplified coverage announced by Minister Ley during the 2016 Federal election campaign. Simplified coverage would see gold, silver and bronze products offered with enhanced clarity on inclusions and exclusions, and the level of excess. The PHMAC is considering two approaches for possible recommendation to the Minister.
Coupled with product simplification, a working group of the PHMAC is looking at standardising clinical terminology, and a second working group is looking at the content of information provided to consumers.
Taken together the recommendations from PHMAC should considerably simplify PHI cover for consumers and make product selection more transparent and much less confusing. The AMA strongly supports a process that ensures value for PHI coverage, given the contribution played by private health as a key component of the Australian health system.
One of the peripheral issues raised for PHMAC consideration, but not yet dealt with, is the issue of transparency of doctors’ fees. There will be increasing focus on this aspect of health expenditure in conjunction with greater transparency of the PHI coverage, hospital costs, and the cost of prostheses.
The AMA Federal Council considered the issue of fees transparency in a policy session at its most recent meeting. The AMA’s long-held position is that a medical practitioner should be free to set his or her own fees. The AMA does not support the charging of excessive fees and AMA leadership over the years has spoken out on this issue. There are signs that the ongoing Medicare freeze is helping to drive up out of pocket costs with an increase from 10.2 per cent of services with a gap in 2013-14, to 14.6 per cent of services in 2015-16.
While the average gap is around $135, patients note the impact where there are multiple services with cumulative out of pocket costs.
Private health insurers are deploying online tools for fund members to understand the likely medical costs for a procedure, as well as hospital and other costs. These tend to be average costs but serve to provide basic information to a patient.
The AMA Federal Council considered ways in which more information might be made available to referring general practitioners to assist in selection of an appropriate specialist. The AMA will continue to consider different mechanisms to improve transparency in fees between medical practitioners. The time is right to do so.
Published: 10 Apr 2017