Private Health Insurance needs urgent attention
Private health insurance must be made more attractive for more Australians if it is to survive.
The AMA has released its latest report card into private health insurance (PHI) and has warned that urgent action is needed to fix the troubled sector.
In launching the AMA Private Health Insurance Report Card 2019, AMA President Dr Tony Bartone said PHI in Australia is on the precipice.
He called on all stakeholders to work together to improve the system and make it more palatable for consumers, especially for young Australians.
“We’ve got many years now where we’ve had consumers making a decision to drop their cover because of lack of affordability, increasing premiums, decreasing coverage, decreasing product utility, and of course that’s just putting further pressure on the premiums which leads to that vicious cycle,” Dr Bartone told Sky News.
“And we need to remember that the private health system underpins access and equity in the public system. So, the more and more Australians drop out of private health, the more the pressure’s on public health and the more the burden and that delay in accessing treatment will be. So, it’s a perfect storm, we might say.”
The Report Card provides patients and consumers with clear, simple information about how health insurance really works, in the hope that better information instills more confidence in the private health insurance system.
It explains what insurance may cover, what the Medicare Benefits Schedule (MBS) covers, and what an out-of-pocket fee may be under different scenarios.
It also highlights the frustrating fact that what insurers pay varies significantly from State to State – this variation can even occur within the same insurance fund.
To help consumers better understand what they are buying, the Report Card sets out the percentage of hospital charges covered by State and insurer, and the percentage of services with no gap, State by State.
It shows that some insurers perform well overall, and some only perform well for certain conditions.
Health insurance policies are unnecessarily complicated and opaque. Each insurer sets the rebate amount that they are willing to pay. If the insurer’s rebate is low, the out-of-pocket cost to their customer will be high. And these out-of-pockets can vary by thousands of dollars.
The Report Card reveals that the same doctor performing the same procedure can be paid significantly different rates by each fund. This is often the untold story behind patient out-of-pocket costs, despite there being high levels of no gap and known gap billing statistics.
“With more than 60 per cent of elective surgery in Australia occurring in the private sector, the prospect of greater stress and demand being placed on the already overstretched public hospital system is looming large unless the drift away from private health insurance is stopped,” Dr Bartone said.
“Australians need and demand private health policies that are affordable, transparent, good value, and appropriate for their individual or family circumstances, or they will walk away from private health insurance altogether.
“The private health insurers must work closely with the Government to ensure that the hard-won reforms of 2018 deliver on the promise of better cover, more transparency, and greater value – or more and more people will drop their cover or not sign up at all.
“An increasing number of younger and healthy Australians are opting out of private health insurance.
“This is leaving a higher proportion of older patients who are increasingly more likely to be suffering from illness or chronic disease and, as a result, they are more expensive to insure, further driving up premiums. This trend is not sustainable.
“We are still seeing increases in premiums averaging three to five per cent a year, when wages growth is firmly stuck at around two per cent.
“Sooner or later, the number of people with private health insurance will fall further – and dramatically.”
A proposed Government website to allow people to search specialists’ fees is meaningless, Dr Bartone said, as it will do nothing to fully inform patients about their likely out-of-pocket costs unless it also lists what patients can expect back from Medicare and their private health insurance fund.
In an interview with the ABC, Dr Bartone said the last four years had seen a continuing decline in market penetration, with customers deciding not to renew their private health insurance.
“That fall in penetration means that more and more people are opting out. More of the older population are remaining in or joining. That’s putting an increase on the funds to pay out and that means that premiums go up, and we have that vicious cycle of increasing premiums, decreasing product value, and more consumers then making the decision to opt out,” he said.
“The private health system underpins our world-class public health system and that – the affordability, the access and the equity in our public health system – depends on a vibrant and robust private health system.”
The AMA welcomed the introduction of the Gold, Silver, Bronze, and Basic categories for policies and the standard clinical definitions applied under each category.
But the Government review and the new insurance policy structure did not address the key issues of affordability and value for money.
In a statement to the ABC’s AM program, a spokesman for Federal Health Minister Greg Hunt said the Government was delivering the most significant reforms to private health insurance in over a decade, which will make it simpler to understand and more affordable.
The Opposition has called for an inquiry into the PHI sector.
JOHN FLANNERY AND CHRIS JOHNSON
The AMA Private Health Insurance Report Card 2019 is available at: https://ama.com.au/article/ama-private-health-insurance-report-card-2019
Published: 31 Oct 2019