Real health insurance reform means discussing all options

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Australians unimpressed by their private health insurer might welcome the opportunity to take back control of their investment by creating their own health savings account, says Australian Private Hospitals Association (APHA) CEO Mr Michael Roff.

The option, suggested in the Australian Financial Review by Ramsay Healthcare CEO Mr Chris Rex, would see Australians dropping private health insurance and instead investing in a health savings account. When the time came to draw down on those savings, they would also have more say in how their money is spent.

Mr Rex said while he supported the government encouraging people to make private choices he is no longer convinced that private health insurance is “the right horse to back anymore.”

“If the business model of health insurance is so unattractive that it requires a huge government subsidy every year and a taxation regime to coerce people to buy your product, it tends to suggest it’s pretty weak,” Mr Rex told the AFR.

His view was endorsed by Healthscope CEO Mr Robert Cooke who said patients would have more control of their health care spend. He also warned of a ‘demographic time bomb’ as healthcare spending in Australia hit 10 percent of GDP.

APHA’s Mr Roff said the option should be discussed as part of the reform of private health insurance and welcomed the Minister’s openness to putting it on the table.

“We are interested in an open debate about how private health care is funded and how it can change to better serve Australians. The Minister has set up the Private Health Ministerial Advisory Committee (PHMAC) and that process is the best way to develop these ideas and test their merits.

“We need to think seriously about long-term structural reform to ensure private health funding is sustainable, rather than just fiddling around the edges of the current policy settings.

“The Minister has told us that all options for the reform of health insurance will be considered and we are encouraged by her spokesperson’s comments that the committee could examine the health savings account proposal.

“Although it would constitute a fundamental change from the current insurance model, it would put real power in the hands of the consumer, rather than faceless insurance companies and therefore we think such a proposal would warrant serious consideration by the PHMAC.”

Mr Roff said private health insurance is confusing and often misleading for Australians, and needs significant changes.

“We need plain English private health insurance policies, clear descriptions of what policies cover and what they don’t so people know the value of the product they are buying. Data from an APHA survey from 2015 shows that 39% of Australians don’t know if their private health policy has any cover exclusions. Of those who do know they have exclusions, almost a third could not name the services that are not covered.

“The Government committed to plain English policies and standardised medical terms in private health insurance policies during the election. The logical next step is a requirement for insurers to regularly update policy holders about any changes to their insurance at regular intervals, like the annual renewal.

“These are very basic and easy things for insurers to build in and will make a considerable difference to consumers.

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