PHI concerns won’t go away by themselves
BY AMA VICE PRESIDENT DR TONY BARTONE
The Government has announced the latest price rise for private health insurance (PHI) premiums, which will kick in from April.
They are going up by almost 4 per cent (3.95%) and will amount to some families paying more than $140 a year extra for their cover. It is the lowest premium rise since 2001, but it is still well ahead of the inflation rate. Despite health inflation running at a significantly higher rate than CPI (and this is part of the problem), this latest rise continues the trend of many recent years of significant increases. The end result is that some families are going to find this very tough to manage.
Consumer group CHOICE has already put out the call for people to consider whether they should keep their insurance cover. While the AMA does not support calls to drop out of the private system, this does raise the question again of whether patients are getting value for money from their PHI premiums.
PHI is a significant cost for all families and individuals. When increases are running ahead of inflation year-on-year, it adds a significant level of burden. Wages are not growing. Cost pressures are building in the average family budget. Some people who are average weekly wage earners will be looking at their insurance and making a decision on whether to maintain it.
It is a question my patients regularly ask me. They will have to see whether the household budget can sustain these increases; especially if they have a product that’s not delivering them any value; especially if they have a product that’s too difficult to understand; especially if they have a product that’s left them with a nasty out-of-pocket experience.
Imagine how they feel when they find out, after being a member of their fund for years and years, that they are not being covered for a condition they thought they were covered for and at the time when they need it.
This is separate to the public discussion on increasing gap shock directly resulting from the extended freeze for many years of MBS and PHI rebates and in stark contrast to very high levels of “known and no” gap rates of fees charged by private specialists.
If you’ve got a product that’s increasing in cost but still delivering increasingly poor value, well the decision becomes an easier one for a family that’s struggling. We know that Australians are opting out at significant rates, and any decision to continue to opt out will ultimately put stress on the entire system, not just the private system but the public hospital system as well.
Essentially, we believe that any policy that fails to deliver what you believe you’re covered for, and doesn’t have the clarity or the information or transparency about what you’ve purchased, is a junk policy.
There are a number of polices out there that do no more than basically cover you for public hospital treatment.
We need to ensure that there is clarity. We need to know that there is consumer information about the type of product – a premium, a middle of the road, and a basic product. There needs to be information about restrictions and any exclusions. We don't support restrictions on policy, and it’s important that consumers are fully aware of what they’re covered for in any environment and in any situation when it comes to inpatient costs (as distinct from any of the additional outpatient costs) of any health treatment they obtain.
PHI is already the beneficiary of significant tax incentives by the Government. Further attempts to increase the taxation requirements or the taxation demand on Australians to support PHI is only going to deliver less of an attractive option.
Calling for an increase in the Medicare levy still avoids the issue at heart. The issue is one of value. We need a product that delivers more value to the Australian public, to the Australian consumer. Forcing them, by using a stick of an increase in the Medicare levy, is to miss the issue on the table: that the product lacks value. The product lacks clarity, and it lacks transparency.
Consumers need more value, more transparency, more clarity in what they’re purchasing, so that when they need their insurance and they make a call on their insurance, they know exactly what they’re going to get and they’re not left with a nasty surprise. That’s the issue on the table. That’s what needs to be clarified. Using a stick will only create a further disincentive to maintaining the insurance that’s required.
There is currently a review committee underway and the AMA is calling on the Government to ensure that all parties, all stakeholders, sit down and try to improve and clarify for consumers. There are far too many policies out there, with significant restrictions, caveats, exclusions, fine print. It’s just too much. You need a double degree to read through those policies.
And there’s no point paying years and years of health insurance if, when you really need it, it isn’t worth the paper it’s written on. It is time for the PHI industry to lift its game – if not voluntarily, then by having its hand forced by Government.
Yes it’s true that new technologies, an ageing population and increasing chronic disease rates are also an important part of the ongoing increases in PHI premiums but these are factors putting pressure on the whole health system. It sharply brings into focus the question of investment in prevention in good primary care and the resulting benefits for the whole system. All the pillars of our whole health system need to bear the weight.
Australia has a strong private health sector and we need an insurance system that encourages its use rather than turns consumers away.
Published: 13 Feb 2018