Health insurance demands robust rethink to restore value for consumers
Widespread and growing community frustration with the cost and inadequacies of private health insurance oblige the Federal Government to initiate a thorough investigation into its value, the Consumers Health Forum said today.
In a submission to the Senate inquiry into health insurance and out of pocket costs, the Consumers Health Forum has called for a Productivity Commission inquiry into the benefit of government involvement in the private health insurance sector, and for a public interest test to measure whether this public investment is in the overall, long-term interest of Australia’s taxpayers.
The submission challenges the premise of the current reform agenda --- to increase health insurance numbers --- when there are so many questions about its worth to consumers.
The chief executive of CHF, Leanne Wells, said the submission finds that despite the many billions of dollars of public money sunk into health insurance this century, there is yet to be conclusive evidence that this investment is providing sufficient returns.
“We are concerned that government outlays in this area continue to increase, not decrease, despite this question of value not having been well established,” Ms Wells said.
“Health insurance has been the focus of continuing revelations about its rising premiums which have increased ahead of inflation every year but one in this century, the diminishing coverage of many policies, and the complexity and confusion about what the policies cover.
“And the central reason for the expenditure of so much public money on health insurance --- that it would reduce pressure on public hospitals --- is challenged by figures showing a continuing deterioration in waiting times for elective surgery in public hospitals since health insurance subsidies were introduced. In 2001-02, the median waiting time was 27 days…that had increased to 37 days by 2015-16.
“These impacts cause us to question two of the key imperatives of the current reform agenda: that the number of consumers with health insurance should be increased and that higher government expenditure in the industry should be part of the solution.
“The decrease in rates of consumers who hold PHI is indicative of the poor value that consumers get for paying higher premiums relative to the value that they can get from the public health system.
“In any event, the ballooning cost of private health care to consumers cannot be blamed on a lack of government investment. It is notable that the profits of health funds and private hospitals have generally boomed in recent years.
“This state of affairs points to the need for a fundamental exploration of the dynamics of private health insurance and why it should be that profits have risen in step with the declining overall value of health insurance to consumers.
“While we do not oppose government expenditure in this area, we believe that this investment should be better targeted to support the purpose for which it was introduced --- to take pressure off the public hospital system through increasing the accessibility of the private hospital system.
“Concerns about the future of health insurance and need for change have been expressed by a wide range of expert commentators. In recent days Private Healthcare Australia has suggested 20 per cent of current members may find it too expensive to continue cover if premiums continue to increase at the present rate. The CHOICE consumer organisation has urged the Government to remove the subsidy for “junk” policies and the nib health fund has suggested radical reform of the health insurance system.
“When we have clinicians, industry players and consumer groups all pointing out such systemic and intractable flaws in private health insurance arrangements, it is clear the time for a comprehensive inquiry to consider substantial reforms of health insurance is well past due and the Government should act on this urgently in the interests of all Australians,” Ms Wells said.
The major recommendations of the Consumers Health Forum to the Senate Community Affairs References Committee inquiry into the value and affordability of private health insurance and out-of-pocket medical costs include;
- That consumers’ ability to choose to be private patients in public hospitals be maintained
- There should be a recommitment to the principle of treatment according to clinical need in public hospitals be back by improved monitoring and data collection on this issue
- That further investigation is conducted into the impact of ‘no gap’ and ‘known gap’ arrangements on quality and availability of healthcare
- That health professionals should make their fees publicly available to allow consumers to be better informed and compare costs before treatment
- That the Department of Health work with providers to develop a process for a single quote on an episode of care that includes all costs
- That there should be a mandated information package which provides consumers with clear information in purchasing health insurance
- That community rating of health insurance be retained
- That policies with benefit limitations and co-payments outside mandated boundaries not be eligible for the government rebate
- That a more robust public interest test be development to ensure that the community is receiving benefit from the high level of government investment in PHI
- That a Productivity Commission Inquiry be undertaken into the benefit of government involvement in the PHI sector.