Private health insurance shake up welcome, but should only be the beginning of reforms

Thursday, October 12, 2017

‘If media reports are to be believed, tomorrow’s announcement on measures to make private health insurance more transparent and affordable are welcome, but we still need a review of how we fund our health system—both public and private—to make sure all Australians benefit’, said Australian Healthcare and Hospitals Association (AHHA) Chief Executive Alison Verhoeven.

‘With more than $6.4 billion of public money to be given to private health insurers through the Private Health Insurance Rebate in 2017–18, and only one-half of all Australians using private health insurance, the Commonwealth Government should establish a comprehensive Productivity Commission inquiry looking at the costs and benefits of private health insurance within the overall health sector.

‘The Productivity Commission inquiry should also consider appropriate levels of profitability within the private health insurance sector, which has become increasingly for-profit driven, but is heavily subsidised and has government policy pushing the public into taking out health insurance policies.

‘Today’s announcement goes even further to significantly de-risk the insurers’ revenue.

‘Offering a discount of up to 10% off premiums will make private health insurance more attractive for people aged 18 to 29, while also decreasing the pooled risk of the overall insured population. By itself, this should reduce the rate at which premiums are increased because the pooled risk has been reduced.

‘Allowing privately insured patients entering hospital with a mental illness to immediately upgrade their policy to fully cover mental health with no waiting period is welcome, but excluding mental health in basic and bronze policies is still a concern.

‘Equally concerning is the exclusion of obstetrics from basic and bronze insurance policies, which discriminates against women.

‘Minister Hunt must now acknowledge that people should continue to be able to use their private health insurance policies in public hospitals, given the retention of public-hospital-only policies.

‘AHHA applauds the Minister’s move to strengthen the powers and resources of the Private Health Insurance Ombudsman and to upgrade privatehealth.gov.au to allow people to compare all policy options from every health fund. This will enhance transparency and consumer choice.

‘As part of receiving government funds through the $6.4 billion rebate, insurers should actively promote privatehealth.gov.au across their promotional and media platforms.

‘AHHA applauds natural therapies no longer being covered by private health insurance from 2019—the Commonwealth Chief Medical Officer found there was no clear evidence of the efficacy of these therapies.

‘The Commonwealth needs to work with insurers and the broader health sector on health insurance use data collection, to ensure greater fee transparency, if we’re to restore the public’s faith in private health insurance’, Ms Verhoeven said.

The Australian Healthcare and Hospitals Association is the national peak body for public and not-for-profit hospitals, community and primary healthcare services, and advocates for universal, high quality and affordable healthcare to benefit the whole community.

Media enquiries: Alison Verhoeven, Chief Executive, Australian Healthcare and Hospitals Association, 0403 282 501

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