Private Health Insurance – what next?
BY ASSOCIATE PROFESSOR JULIAN RAIT OAM, CHAIR, AMA COUNCIL OF PRIVATE SPECIALIST PRACTICE
With the recently concluded federal election and the return of a Coalition Government, the AMA believes it is time to concentrate on the agenda ahead. This was the focus of a recent combined meeting of the Council of Private Specialist Practice and the Health Financing and Economics Committee held on June 29 in Brisbane.
Following two years of deliberation by the Private Health Ministerial Advisory Committee, the Government recently implemented reforms to private health insurance. Reforms that: developed clearer consumer communication; introduced standardised clinical definitions; and brought in the Gold, Silver, Bronze and Basic tiers of insurance.
The Government has also made a start at reforming the system in other ways as well – bolstering the power of the Private Health Insurance Ombudsman, allowing upgrades for mental health cover, and finding savings through cuts to the amount paid by insurers for prostheses.
But the Government reforms did not address affordability in the longer term – this problem is starkly obvious with the last round of premium increases. The rate of increase in premiums has slowed, but still outstrips inflation and, more importantly, outstrips wages growth.
Private health insurance appears to be facing a crisis, with more than a dozen successive quarters of decreasing coverage. If affordability is not addressed, membership rates will continue to fall, threatening the viability of the entire health system. The combined meeting agreed that further reforms are required – and required soon.
The meeting explored the reality facing private health insurance today. The population is ageing. We have ever increasing numbers of high cost patients in the insurance pool, while younger people are voting with their feet, choosing not to join and even walking away from PHI in growing numbers.
A recent speech from the Australian Prudential Regulation Authority recognised this issue as well, talking about what insurers will need to do in order to remain stable. It’s a difficult task, Australia’s health system is complex – but this is one aspect that we cannot get wrong.
The meeting explored options for the future but recognised that if we go too far down the path of restricting outlays, cutting costs and reducing rebates, people will see little value in their private health insurance product, and therefore, the private health system.
The meeting explored future reforms of the private health sector – and all were in absolute agreement that any reforms need to protect independent clinical decision-making by clinicians, who are chosen freely by the patient. The meeting also agreed that medical consultations should be conducted in an appropriate facility free from financial interference by insurers. The meeting also supported the abolition of poorly indexed, differential insurance rebates.
Furthermore, as medical professionals we acknowledged that we will have to contribute to increasing the stability of the sector and find ways to cut costs to the system. We will have to engage on more effective ways to treat patients in lower cost environments (such as day hospitals) where it is clinically appropriate to do so. We will also need to have a conversation with Government about greater investment in the private system.
The meeting explored what we need to do for the next three years of a Coalition Government. We agreed that the AMA needs to be engaging in constructive reform with stakeholders to address the underlying concerns. We need to look at how to put value back into private health insurance in the eyes of policy holders, while also delivering affordability in the eyes of consumers.
We need to look at reducing unnecessary cost through innovation, while guarding against clinical decision-making being driven by health funds. And we need to look at reducing premiums through looking at what other levers might need to be pulled by government – including additional investment – to shore up the private system.
The meeting generated many new ideas – but it was only the start of the next tranche of work for the AMA.
Published: 12 Jul 2019