Government moves toward private health insurance reform

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COMMENT | By Australian Private Hospitals Association Chief Executive Michael Roff

The Federal Government presented its case for economic reform to the nation in the 2016-17 Federal Budget on 3 May 2016.

Treasurer Scott Morrison announced an additional $71.4 billion in funding for Australia’s health care system, representing a 3.2 per cent increase on the 2015-16 Budget, and an 11.6 per cent increase on 2013-14.

But there were few surprises on the health front.

Prime Minister Malcolm Turnbull had already used the Council of Australian Governments meeting in April to offer the states additional funding for public hospitals and a subsidised public dental scheme was leaked early.

The Budget failed to reveal the government’s response to the Private Health Insurance Review. At the time of writing, this key information still hadn’t been made available.

However, an announcement contained in the Budget leads the Australian Private Hospitals Association (APHA) to believe future work around private health insurance will be collaborative and consensual.

Part of the $71.4 billion will be put toward the formation of a Private Health Sector Committee (PHSC) which APHA believes will drive a lot of discussion in the private sector over the next three years.

According to Budget papers, the 12-member committee consisting of private hospital and consumer representatives, among overs, will provide advice on the Government’s approach to private health insurance reform.

Including industry specialists and consumer expertise will mean that reforms can be developed through consensus, which will deliver better outcomes without unintended consequences.

The PHSC will work toward ensuring private health insurance products meet consumers’ needs, improving the public’s understanding of products, and restoring Australians’ faith in the value of their private health cover.

APHA has given its full backing to the Government on this announcement and has previously made a number of recommendations on ways to improve Australia’s private health insurance system.

Australians would benefit from regular communication from their insurers. They need to be aware of what their cover includes so they are in a position to make informed decisions depending on their circumstances.

APHA believes Australians should also be made aware of their insurer’s relationship with the hospital of their choice.

With more than half of the population (55 per cent) covered by some form of private health cover, this information is vitally important to Australians.

There are also a range of measures the Government could take to increase the affordability of health insurance.

The Government could achieve this by increasing the allowable excess on hospital cover policies and by removing the requirement for health insurers to pay benefits for private patients in public hospitals.

Private hospitals exist to complement their public counterparts. When Australians use their insurance to be treated in a private facility, public hospitals benefit because it alleviates the pressure on an already stretched system.

APHA believes the PHSC is capable of delivering necessary change and commends the Government for taking another step toward achieving substantive and meaningful reform.

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