Australian consumers find that Private Health Insurance (PHI) is increasingly unaffordable, confusing and are unsure about the value that it provides. Despite considerable government investment in the PHI industry, there is yet to be conclusive evidence that this investment is providing sufficient returns. We are concerned that government outlays in this area continues to increase, not decrease, despite this question of value not having been well established.
Because of this, reforms to PHI must centre around two key questions – how can PHI provide better value for the taxpayer, and how can it provide better value to consumers? Our submission explores the terms of reference and the key issues for consumers in light of these questions.
How PHI is, and should, be used in public hospitals has become a major issue in recent months, with parties from all sectors as well as both state and federal government contributing potential suggestions. As advocates for consumers, who do not have a financial stake in this, we offer suggestions which are based on the reality of consumers’ use of their PHI and how their health system as a whole can best serve them.
Australian health consumers face considerable out of pocket costs, both when using PHI and when using the broader health system. In fact, Australian consumers bear among the highest out of pocket costs across the OECD countries1. These out of pocket costs are often hard to estimate or are not able to be estimated prior to treatment. Changes to how health professionals publicise their fees and how insurers work with health professionals and hospitals to communicate this to consumers are needed.
The design of Private Health Insurance policies is complex, with some current regulations helping consumers and others hindering their ability to use and understand them. A re-design of these policies is necessary to improve the usability of these products and ensure that they are perceived to be health products. Key elements of this redesign are the continuation of community rating, improving the basic Complying Health Insurance Product (CHIP) and removing within treatment category restrictions.
Finally, whether PHI provides value to the taxpayer has not been well established. We believe that a robust public interest test should be developed to measure whether this investment is worthwhile and in the interests of all Australian taxpayers.