‘Urgent reform needed’ for private health insurance


The continuing fall in private health insurance participation shows policy settings must be urgently reformed, says Australian Private Hospitals Association (APHA) CEO Michael Roff.

The COVID-19 pandemic has highlighted the issue, he said, with cover becoming increasingly unaffordable for some people. Lengthening waiting lists mean it must be addressed as soon as possible to ensure Australians have access to treatment. 

The number of those with private health insurance has declined again to 43.6 percent, down from 47.3 percent just five years ago, according to the June 2020 quarter report by the Australian Prudential Regulation Authority (APRA). The last time it was this low was December 2006.

Mr Roff said the Federal Government should consider a range of measures in the delayed Budget – now due on Tuesday 6 October 2020 – to meet the significant affordability issues people face.

These have been exacerbated by the COVID-19 pandemic, which has increased pressure on personal finances, with unemployment rising particularly among young people and women.

“The Government needs to act to address affordability concerns so people can continue to access private hospitals when they need them,” Mr Roff said.

“APHA proposes restoring the health insurance rebate to the original 30 percent for low-income families. This income group includes many elderly Australians who rely on access to private hospitals to avoid lengthy public hospital wait times. If they exit private health insurance, public hospital capacity will be quickly overwhelmed.”

The biggest net decrease in people covered for private hospital treatment was for those aged 20-24 – a reduction of almost 8,500 since the March quarter, out of the total drop of 29,000.

Mr Roff said allowing young people to be covered for longer on their parents’ health insurance would help address this exodus.

“We know young people have been particularly hit by the pandemic, through job losses and likely future loss of opportunity. 

“A small extension in the amount of time they can be covered on their parents’ health insurance will mean fewer are lost to the system overall,” he said.

Mr Roff also called for a review of the Lifetime Health Cover loading, which is applied to premiums for every year a person fails to take up insurance after their 31st birthday. This is now deterring Australians from investing in insurance past that age, rather than encouraging take-up as originally intended.

“While this is a complex area to reform, APHA thinks options including adjusting the age the loading takes effect, adjusting the penalty level or allowing an amnesty period are all possible changes that could have a positive effect on this policy,” Mr Roff said.

He called for urgent action, as a tidal wave of elective surgery waiting lists is about to hit public hospitals. 

“The APRA data shows there were more than 230,000 private patient episodes put on hold due to the pandemic, on top of deferred public patient care – an indication of how much the health sector will have to make up in the near future,” he said.

APRA’s report said the private health insurance industry had recognised $1.4 billion in claims liabilities to meet the cost of procedures deferred during the quarter.

“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,” Mr Roff added. 

“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.” 

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