Rebate reform needed to nurture rise in insurance participation

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Private health insurance participation has increased for the first time since June 2015 – but urgent measures must be taken to ensure it is not just a blip in recent trends, warns Australian Private Hospitals Association (APHA) CEO Michael Roff.

The latest data from the Australian Prudential Regulation Authority (APRA) showed a 0.9 percent increase – 104,000 new members – for the September 2020 quarter.  

“While it is encouraging to see a small increase in health fund membership, these figures should be treated with caution,” Mr Roff said. 

“We know health insurers have been providing premium relief to policy-holders due to COVID-19 and this may be artificially inflating the figures. We need to know if this increase will be sustained or it is just a statistical anomaly.”  

Mr Roff was encouraged by the increase in youth participation in private health insurance.  

“The biggest increase was in the 35-to-39 age bracket, followed by those 20-to-24 years old, indicating the youth discount introduced by the Federal Government may be having an impact and bringing younger people into the system,” he said.  

In order to maintain the rise in participation, Mr Roff said there was “a very strong case” to restore the health insurance rebate for low-income earners. 

“In the years since it was introduced, the effective rebate has been reduced from 30 percent to less than 25 percent. These households face a ‘double whammy’ of increased premiums and reduced rebates because every year the value of their private health insurance rebate goes down,” he said.  

“The Federal Government has an opportunity in the 2021 Budget to provide significant relief to these families and make the rebate count again.” 

This was supported by Private Healthcare Australia CEO Dr Rachel David, who said restoring the means-tested rebate is the cheapest, most effective way the Government can provide surgery and other hospital treatments to Australians.  

“Almost half of the 13.74 million Australians with PHI have disposable incomes under $50,000. Restoring the rebate to 30 percent for low- and middle-income Australians will make premiums more affordable for people who are paying for the cost of their own healthcare, as well as reducing pressure on our public hospitals,” she said.

“Without restoring the rebate, Australian governments will need to spend billions more of taxpayers’ money to clear the backlog of elective surgery and provide essential medical care in public hospitals, because they will be paying the full cost of treatment.” 

Although private hospitals’ episodes of care increased by 23.5 percent this quarter following the easing of COVID-19 elective surgery restrictions, it was still 5.4 lower than the same period last year. 

If Victorian private hospitals are taken out of the equation – the state’s elective surgery restrictions are in place until the end of November 2020 – then the figure is only 0.7 percent down on the same period in 2019.

Mr Roff called for urgent measures to improve the affordability of private health insurance, as both the private and public sectors seek to catch up on deferred treatments.

“There are estimates the backlog in elective surgery resulting from COVID-19 surgical restrictions could take years to clear, even with the full capacity of the public and private systems. 

“We need to urgently address private health insurance affordability to ensure Australians can continue to access private hospital services because the waiting times in public hospitals will just be too long,” he said. 

Read more: ‘Urgent reform needed’ for private health insurance

Read more: Private hospitals adapt to COVID-19 challenges

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