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10 Oct 2017


A key plank of AMA policy and advocacy is support for the dual health system in Australia, with robust and sustainable public and private systems. International commentators often cite this balance of public and private, with access to care by all Australians, as an ideal model.

One of the components of the private health system under consideration by the Federal Government is reform of private health insurance to contribute to the long-term viability of the private health system.

For the past year the Private Health Ministerial Advisory Committee (PHMAC) has been examining aspects of private health insurance. While the deliberations of the PHMAC are confidential, a communiqué is published after each meeting and is available for download on the Department of Health website.

One of the complaints about current private health insurance arrangements that the AMA receives from members is when patients are scheduled for procedures only to discover that their private health insurance does not cover them for the procedure. The issue of coverage is one of the areas of focus for PHMAC with modeling to deliver value and certainty to patients.

An element of coverage certainty is to standardise clinical language so that every policy uses the same terminology. Another is to improve transparency on what clinical items are covered within each policy type. This avoids the multiplicity of exclusions and excesses that apply now. Clearer, consistent coverage will increase the value proposition for policy holders.

The Federal Government has committed to delivering reduced premiums to make private health insurance more affordable. Recent media reports suggest that this will come from further reductions in the reimbursement paid by private health insurers for medical devices. While delivering savings to private health insurers, the implications for flow-on effects need also to be considered.

The other area where the Government has identified potential savings is in the use of private health insurance to fund private patients in public hospitals. The Government is consulting on this issue at present. The AMA submission can be read at

The AMA recognises the very legitimate rights of patients to use their private health insurance including in circumstances where it provides the appropriate clinical care, or where the public hospital is the most appropriate option. Patient choice is a fundamental feature of the Australian health system, which includes the option for patients to use their private health insurance in a public hospital. 

These issues highlight the complexity of reform to private health insurance. Private health insurance is a significant financial commitment and must deliver, not just affordability, but also value to the patient. 

Because private health services are only one part of the dual system in Australia, the equally vexed issue of adequate funding of the public system will shortly come to the fore as negotiations begin between the Federal Government and the State and Territory Governments for the next National Health Reform Agreement.


Published: 10 Oct 2017