Australian Labor Party’s private health insurance premium plans

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The Australian Labor Party has pledged to cap private health insurance premium increases at two percent for two years in a plan Australian Private Hospitals Association CEO Michael Roff has described as “superficially appealing, but with a sting in the tail”.

Labor leader Bill Shorten and Opposition spokesperson on Health Catherine King are determined to see premiums capped in a move they say will save families $340 a year on average.

Ms King said the status quo in private health insurance cannot continue.

“Families are paying an average of more than $1,000 every year for private health than they were when the Liberals came to power in 2013.

“Australians are being ripped off – it’s time to shift the balance back in the interests of families, rather than the big health insurance companies. Prices are up, profits are up – but quality and value are way down,” she said.

But the consequences of a two-year halt on premium growth could have exactly the opposite effect that Labor are hoping for, warned Mr Roff.

“With the number of health fund payouts increasing each year, limiting the amount of premium revenue they can collect may lead to pressures that force funds to limit benefit payments.

“The easiest way for funds to do this would be to cut the amount they spend on medical “no-gaps” schemes. Gap-cover arrangements are already under pressure and while the Labor plan claims to deliver $143 in savings for an individual, the removal of gap-cover could easily see this amount more than offset by out-of-pocket costs for doctors’ bills,” he said.

The winners under the Labor plan would be those who did not use their insurance, while those who need hospital care would take the hit – adding to the affordability crisis.

Mr Roff said there were alternative options that would have an immediate impact on private health insurance premiums that he encouraged the Labor party to consider

“If Bill Shorten is looking to pull a rabbit out of a hat on private health insurance costs and deliver real and sustainable savings for health fund members, he could start looking at the $1.5 billion public hospitals rip out of the system each year by “harvesting” privately insured patients who are entitled to free treatment in the public system.

“Ending this practice would lower premiums, reduce waiting lists in the public system and ease pressure on public hospitals. The Australian Institute of Health and Welfare released two reports last year showing that privately insured patients are jumping public waiting list queues, illustrating that the current system is not only unnecessarily pushing up health fund premiums, but is blatantly unfair,” Mr Roff said.

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