Behind headlines on insurance use in public hospitals are patients who just want affordable access to quality care

Wednesday, June 21, 2017

While the recommendations in today’s report by Catholic Health Australia (CHA) on the use of private health insurance in public hospitals are useful, the substance of the report is overly-influenced by the self-interest of private hospitals (many of which are non-profit organisations receiving substantial tax benefits) who are concerned ‘that the growth of private patients in public hospitals is affecting their profitability and investment decisions’ (page 35 of the report), according to the Australian Healthcare and Hospitals Association (AHHA).

‘We have a world-class public health system with great clinicians, and importantly it's accessible to all, regardless of ability to pay: that's why Australians value it so highly and want to protect it,’ says Alison Verhoeven, AHHA Chief Executive. ‘Self-interested attacks by private businesses seeking to protect and grow their profits, supported by simplistic public policy, risk pushing us towards a US-style health system where only those with money can afford healthcare. This should be of concern to all Australians.’

The report claims that the key driver of the growth of private patients in public hospitals may be the practices of hospitals which encourage patients to use their private health insurance. While there have been cavalier claims by the Commonwealth Government, health insurers and, in this report of anecdotal evidence of patient coercion, the report acknowledges that ‘it does not appear that many patients are complaining to independent complaints bodies about private patient election processes (page 35)’. In New South Wales, for example, which has by far the largest use of private health insurance in public hospitals, there were only 5 complaints in 2015-16, out of a total of 11,842 complaints to the NSW Health Care Complaints Commission.

‘Public hospital executives and staff who are some of Australia’s most hard-working, committed clinicians and professionals reject inferences in this report that they do not have codes of conduct in place and adhere to these codes in the way they work with patients, in contrast with CHA hospital staff. It’s not factual, nor is it helpful,’ says Ms Verhoeven.

Recommendations in the report relating to competitive neutrality principles do not align with the report’s own acknowledgement of the pricing discounts applied through the Independent Hospital Pricing Authority for private patients in public hospitals (an independent pricing mechanism is a key requirement in the COAG agreement on competitive neutrality). Further, a truly competitive market would not see $6 billion of taxpayer funds directed to subsidise private health insurance companies, and those private hospitals claiming not-for-profit status might be reclassified and subject to greater taxation of their revenues.

As the report acknowledges, growth of out of pocket costs and exclusionary private health insurance policies are likely to have driven some of the increased use of private health insurance in public hospitals, and much of the complaints made about health service provision in Australia. In June 2009, 9.5% of policies were exclusionary, increasing to 37% in June 2016, and further to 39.3% in March 2017. Excesses and co-payments are required for 82.6% of hospital cover policies and there are an increasing number of policies which only cover public hospital treatment and do not cover patients for treatment in a private hospital at all. The cynical marketing of these policies by private health insurers (with advertising campaigns currently being conducted with advice that this will assist policyholders to avoid tax penalties) should be top of the list for targeted reforms in the health sector.

‘It is pleasing that the report notes that workforce recruitment and retention, rural and regional health services, and many highly specialised services would be impacted by limiting use of private health insurance in public hospitals.  It is also worth noting that there would be a shortfall of around $1 billion in public hospital funding which would need to be found from somewhere – government or patients – if use was limited,’ says Ms Verhoeven.

‘While there are shortcomings in this report, it is important that attention be paid to the increasing out of pocket costs of healthcare experienced in Australia, and related access and affordability issues.  More attention could be paid to the financial benefits being derived by specialists as a result of private practice arrangements in public hospitals. Better data reporting disaggregated to hospital level on private health insurance use would be useful to inform understanding of the drivers, and analysis of the impact of capped funding (including capped growth funding) arrangements by state and Commonwealth governments would also assist in understanding the funding pressures experienced in public hospitals.

‘Ultimately, what all healthcare providers should be interested in is ensuring that all Australians have access to healthcare that is affordable, accessible, safe and high quality. For the most part, we achieve that reasonably well in Australia – however, while we still have public hospitals that need to fundraise by selling cupcakes and we have private hospitals and health insurers more focused on achieving a healthier bottom line, we have a way to go, and governments at both state and Commonwealth levels need to step up.’

The Australian Healthcare and Hospitals Association is the national peak body for public and not-for-profit hospitals, Primary Health Networks, and community and primary healthcare services.

Media enquiries:

Alison Verhoeven, AHHA Chief Executive, 0403 282 501

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