Private Health Insurance reform – the policy vacuum and the opinions
BY DR OMAR KHORSHID, CHAIR, AMA HEALTH FINANCING AND ECONOMICS COMMITTEE
There is no disagreement private health insurance (PHI) sustainability is at a crossroads. Without reform, the private health insurance as we know it, is on a trajectory to oblivion. While some might cheer, those of us who work across the public and private hospital sectors know this outcome will hurt public patients the most. The already stretched public hospitals with unacceptable elective surgery treatment waiting times, are not at all well placed to absorb the nearly three million (2.7m) episodes of private hospital elective surgery episodes undertaken in private hospital beds and financed by PHI.
The Prime Minister has stated his Government will listen to all suggestions to arrest the slide in private health insurance. The AMA has been methodically developing our own options for reform which will be announced when the time is right. In the meantime, Private Healthcare Australia recommends restoring the 30 per cent base rebate for young people under 40 and for the same group, introducing a fringe benefits tax exemption for PHI premiums. Private Healthcare Australia also want a targeted PHI promotion campaign to increase awareness and understanding of the existing, recently implemented, age-based premium discount and the Lifetime Health Cover penalties for delayed PHI purchase. Individual insurers have been in the media promoting their own preferred solutions including the abolition of Medicare and community rating that protects patients from premium price discrimination on the basis of health status, PHI claims history and genetics etc.
The Medical Technology Association of Australia (MTAA) is advocating for change to improve the efficiency of private healthcare delivery, largely within the existing PHI policy parameters, including premium restraint from the most profitable insurers. The Australian Dental Association suggests PHI needs a full scale review. They also favour replacing PHI with government Health Savings Accounts (HSA) similar to the Singapore model.
Actuaries Australia offers a number of solutions that include: the promotion of out of pocket doctor’s fees linked to patient outcomes; creating a role for independent care coordinators to guide patients in medical practitioner selection along their health care pathway using evidence of outcomes and fees; a prospective PHI re-insurance scheme to encourage insurers to more actively manage the health costs of high cost members, including the adoption of outcome based PHI benefit payments; and more effective PHI promotion.
With all of these stakeholder suggestions for PHI reform, the jockeying for influence amongst stakeholders is gaining pace. Meanwhile, the Government is holding its cards close to its chest. With the Federal Budget due to be announced in May 2020, any new spending in the health portfolio will likely need to be offset at least in part by portfolio savings if the Government wants to maintain its commitment to a budget surplus. No wonder, the Health Minister is so keen to rush through Parliament a Data Matching Bill, designed to increase MBS & PBS compliance in the hope of generating savings.
The Minister’s priorities for spending these savings won’t be publicly known until Budget night. The not yet fully agreed public version of the 2020-25 National Health Reform Agreement makes it pretty clear any new health sector money in the 2020 Budget is unlikely to be spent on public hospitals other than by virtue of the existing funding formula.
The AMA will be doing all that it can to ensure the PHI solutions that get implemented are genuine, address the underlying cause of young people dropping out of PHI, maintain PHI equity, protect doctors from PHI interference in clinical decision making and hold private health insurers to account. It is vital new government investment is not commandeered by health insurers for profits or PHI administrative budgets – budgets that are already running at around nine per cent of premium revenue per annum.
 AIHW Admitted Patient Care: Australian Hospital Statistics 2017-18
Published: 13 Nov 2019