The peak body representing doctors is the latest group to call for an overhaul of the private health insurance industry, as pressure mounts on the federal government to force greater transparency and better value for money from insurers.
On Thursday the Australian Medical Association released its private health insurance report card which emphasised that young people especially were dropping private health insurance or never taking it up in the first place, instead favouring the public health system.
“With more than 60% of elective surgery in Australia occurring in the private sector, the prospect of greater stress and demand being placed on the already overstretched public hospital system is looming large unless the drift away from private health insurance is stopped,” AMA president, Dr Tony Bartone said.
“Australians need and demand private health policies that are affordable, transparent, good value and appropriate for their individual or family circumstances, or they will walk away from private health insurance altogether.”
Private health insurance for hospital treatments has declined as a percentage of the population for four years in a row, from 47.4% in the June quarter of 2015, to 44.2% as of June 2019. In the same period, the number of people holding private hospital coverage with hospital treatment products fell from 11.3 million to 11.2 million.
The AMA’s concerns come despite reforms introduced by the federal government in April aimed at making the system more sustainable and consumer-friendly. The new rules meant insurance policies needed be labelled as gold, silver, bronze or basic so that consumers could more easily see which policies provide the most comprehensive cover.
But a report published by consumer group Choice on Wednesday found far from simplifying the system, the categories were confusing, with some silver products costing more and providing less coverage than gold ones. Bartone said the tiered system had also failed to address key issues in the system including value for money and affordability of policies.
“As the insured population continues to age, the likelihood of requiring hospital treatment rises,” the AMA report said. “This generates higher claims and exerts upward pressure on premiums, exacerbating this issue further.”
The AMA report card also compared the benefits paid by insurers for common procedures and services including obstetrics and hip replacements. The amount paid out by the same insurer varied between states and territories, in some cases by hundreds of dollars.
For example, Bupa paid out $2,064 for an uncomplicated baby delivery in Queensland compared with $2,271 in South Australia. NIB consistently paid out the lowest benefits across all common procedures when compared with other major insurers. HBF and HCF paid the highest benefits for common procedures.
The consumers Health Forum and the Australian Healthcare and Hospitals Association (AHHA) are among the groups pushing for a comprehensive independent inquiry into private health insurance.
Acting AHHA chief executive Dr Linc Thurecht said an independent Productivity Commission review of the whole healthcare system, both public and private, was needed.
“This review should also investigate and clarify the public policy objectives that are being served by government support of private healthcare and private health insurance, through publicly funded subsidies and other mechanisms,” he said.
