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05 May 2016

Health Minister Sussan Ley has deferred action on private health insurance (PHI) reform until after the Federal Election, instead announcing a new committee to advise her on the path forward.

Despite already undertaking a review of PHI, and setting up a working party on the cost of prostheses, the Government has now committed $2.2 million over three years to establish an expert group – the Private Health Sector Committee (PHSC) - to provide technical and specialist advice on designing and implementing the reforms.

The Prostheses List Advisory Committee (PLAC) will be reconstituted and enhanced to include additional expertise, as recommended by the Industry Working Group on PHI Prostheses Reform.

With PHI rebates budgeted to cost $6.5 billion in 2016-17, the Government has also continued the freeze on rebate thresholds, saving more than $370 million.

“The 2016–17 Budget puts in place key building blocks to reform the private health insurance system for the long-term benefit of consumers,” Ms Ley said. 

“This will include a consumer-focused expert Private Health Sector Committee, as well as a revamp of the current Prostheses Listing Advisory Committee to make medical devices more affordable and available to Australians faster, without compromising safety.”

Commentators were not convinced.

“In October last year, the federal minister for health launched a series of national consultations focused on the consumer value of private health insurance and the long-term sustainability of current arrangements,” Mike Woods, Professor of Health Economics at University of Technology Sydney, wrote in The Conversation.

“A Department of Health online survey elicited over 40,000 responses. In something of an understatement, the minister reported that, ‘… consumers are frustrated with their Private Health.’

“The immediate response was to set up a working party on the cost of prostheses. The budget is also funding a private health sector committee to provide advice on private health insurance reforms – an issue for some time after the election. 

“In the meantime, the government is making more savings by continuing to “pause” the indexation of the private health insurance income tiers.”

News Ltd’s national health reporter Sue Dunlevy wrote that “despite talking up the need for health fund reform and undertaking a review, Ms Ley has refused to act on the advice she received”.

“Instead, she has set up another committee – the Private Health Sector Reform (sic) Committee – to spend three years advising her on private health insurance reforms,” Ms Dunlevy wrote.

“Health fund members who faced a 5.59 per cent premium rise last month will have to spend another $2.2 million through their taxes to fund this committee.”

The private health sector, predictably, was more generous.

The Australian Private Hospitals Association (APHA) said the Government was taking the right approach: “Rather than ripping money out of the system and causing chaos it will allow managed reform to a sustainable system.”

Private Healthcare Australia (PHA) said the PHSC would oversee the implementation of measures that would eventually save more than $800 million a year and keep premiums lower.

The AMA’s submission to the PHI Review last December predicted the review would find what medical practitioners see daily: that people often only discover they are not covered for common procedures when they need treatment.


Maria Hawthorne


Published: 05 May 2016