The head of the Australian Medical Association, Dr Michael Gannon, has called on private health insurers to stop selling inappropriate policies and to wind back “aggressive tactics” that undermine doctors and consumers.
“We continue to be concerned by the behaviour of the larger insurers,” Gannon told a conference of senior health insurance fund staff, representatives from the Australian Prudential Regulatory Authority and senior staff from the Department of Health in Melbourne.
“Private health insurers have done well. In 2015 Medibank Private posted a maiden full-year profit of $285.3m, NIB posted profit of $81.7m. This year the industry successfully lobbied this government to increase their premiums by a weighted industry average of 5.59%.
“There appears to be a concerted effort on behalf of [major insurers] to undermine and control the medical profession. The stage is being set for an American-style managed care system.
“The big insurers are using aggressive tactics to reduce their benefit outlays and increase their profits for their shareholders.”
Gannon said he believed private health was an essential pillar of the overall health system. But he added the behaviour of some insurers risked undermining any good contributions private insurers made to the system.
Some private health insurers were refusing to pay for preventable adverse hospital events and had successfully negotiated contracts with hospitals containing clauses for non-payment for hospital-acquired complications and readmissions within 28 days, he said.
“This effectively adds more exclusions to existing policies and will have a detrimental impact on our ability to care for our privately insured patients,” Gannon said.
“Other insurers are requiring preapprovals for surgery, effectively questioning the medical practitioner’s advice to the patient. These behaviours mean the patient may not be able to receive treatment they need at the time they need, undermining the value of the product purchased by a consumer.
“Some just aren’t paying.”
Changes to private health insurance policies were also being communicated poorly to consumers, Gannon said, a problem he described as being symptomatic of a system “seemingly designed to confuse customers to the advantage of the insurers”.
As a result people did not understand their health insurance policy and were missing out on necessary treatment when they needed it, he said.
He also took aim at private health insurance policy comparison websites, calling for commissions from the sales of insurance products by third-party comparison sites to be made transparent.
The Australian Medical Association believed public and private systems work side by side to provide universal healthcare, Gannon said. He said the public system would “collapse overnight” without private system support.
“However, we also note that insurers sell products to consumers that are for cover in a public hospital only,” he said.
“In that regard, our position is clear. We are keen to see ‘junk policies’, those that merely satisfy requirements to avoid the Medicare levy surcharge and that only cover treatment in public hospitals, be eliminated.”
The health minister, Sussan Ley, in October announced a private health ministerial advisory committee to provide technical and specialist advice on designing and implementing reforms to private health insurance.
Reforms already announced include reducing the cost of medical devices as set by the prostheses list by 10% for cardiac devices and intra-ocular lenses used to treat cataracts or myopia, and by 7.5% for hip and knee replacements.
The reforms, once they take effect from 20 February, will cut costs for insurers by $86m in the first year, and total $500m over the next six years, savings which Ley says should be passed on to consumers through lower premiums.
• Experts agree private health insurance is broken. But how can it be fixed?
• Market failure: private health insurance only worth it for ‘the pregnant, the rich and the sick’
• Majority of consumers unsatisfied with health insurance policy
