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10 Apr 2018


The prevailing debate about the value proposition of private health insurance – with claim and counter-claim, and punch and counter-punch, in the media – is one of the most important health policy discussions of recent times.

It needs a solution. It is a priority for the Government and the Opposition as they head to an election year.

The outcome will have a long-term impact on one of the pillars of the health system – the whole private health sector.

It affects all of us, wherever we work in the health system.

Most importantly, it affects every Australian who needs potential access to health services every hour of every day across the nation, not just people with private health insurance policies.

Anything that diminishes the ability of private hospitals to perform their share of health care places huge pressure and stress on public hospitals and the primary care sector. Private hospitals are an essential contributor to universal health care in Australia.

So, we need this resolved. Now.

The whole debate revolves around what people get when they invest a significant portion of their household income into a private health insurance premium.

It is all about choice and value … and trust.

Private health insurance is supposed to offer policy holders greater choice when it comes to their doctors and their treatment.

It is supposed to be value for money, but premiums continue to increase year after year – without policy improvement and without greater clarity about what exactly the policy covers.

Trust is being replaced by fear in the minds of patients with private health cover – fear that they will not be covered if they have an accident, fall ill, or require surgery.

The actions of the bigger health insurers are feeding this fear. Bupa has been the worst offender. Their recent actions, primarily their decision that the no-gap or known gap rate will only be paid when a medical service is carried out in a Bupa-contracted facility, is US-style managed care writ large.

If this approach is allowed to go ahead unchecked and unchallenged, the other funds will follow suit and the Australian health system will be turned on its head.

Patients will lose choice of doctor and hospital. They will get less value from their expensive policies. The confusion about what is covered by each and every policy will be more confusing.

Already, too often patients only find out they aren’t covered when they go to use their insurance – even sometimes after a surgical procedure has taken place.

Allowing restrictions to be hidden in fine print is unconscionable. Policies must cover patients for private hospitals, unless they are specifically and clearly identifiable as ‘public hospital only’ policies.

And patients must be able to use their private health insurance in public hospitals, if they choose to do so.

The Government is awake to the need for a fix in private health insurance. Its review of the sector is in its second year, and will report soon.

Health Minister Hunt has already indicated that insurers will be required to categorise products under gold, silver, bronze, and basic labels, and use standardised clinical definitions, among other improvements.

The insurers must not be allowed to sabotage these reforms, nor should they try. We will call them out.

The insurers have been attempting to shift the focus away from the deficiencies in their products by claiming medical fees are driving high out-of-pocket costs for patients. The evidence says otherwise. The latest APRA statistics show an overall no-gap rate of 88.1 per cent and a known gap rate of 7.3 per cent. Medical fees are not the problem.

The AMA is opposed to egregious fee setting by a small minority. We oppose booking fees that do not relate directly to an MBS service. But whether those doctors like it or not, we will do what we can to discourage it.

We know that MBS rebates have failed to keep pace with the true value of health care and the cost of providing quality services. Equally, we know that substantial out of pocket costs (or even the threat of them) mean that patients defer important clinical care.

Trust is important. At the time the private health insurance issue was gaining prominence in the media in late March, a Roy Morgan poll reported growing distrust in health insurers, with the industry recording a Net Trust Score of minus 2.6 per cent. Yes, they had plunged into negative territory in the eyes of the public.

The Poll’s author said that this level of industry mistrust should be of concern to the funds.

More significantly, the Morgan Poll said that ‘there is no doubt that when a patient has to pay an unexpected gap at a doctor’s surgery or hospital, they do not blame the health professionals, they blame their private health fund’.

The AMA will continue to take the fight up to the insurers on behalf of the profession and our patients, to ensure the future of our world-class health system.

Published: 10 Apr 2018