Key Takeaways:
- The value of private health insurance in Australia is eroding due to rising premiums and decreasing coverage.
- Almost 70% of private health insurance policies now contain exclusions, leaving many Australians without adequate coverage.
- The Australian Medical Association (AMA) is calling for urgent reform to protect patients and ensure that private health insurance provides value for money.
- The AMA wants insurers to return at least 90% of premiums to consumers in the form of treatment benefits and for an independent authority to oversee the health insurance sector.
- Underfunding has weakened the public healthcare system, forcing many Australians to rely on private healthcare, which is becoming increasingly unaffordable.
Introduction to the Issue
The Australian Medical Association (AMA) has released a report highlighting the eroding value of private health insurance in Australia. The report found that private health insurance premiums have risen sharply, outpacing inflation and wage growth, while the coverage provided by these policies has decreased. Almost 70% of policies now contain exclusions, leaving many Australians without adequate coverage for certain treatments or conditions. The AMA is calling for urgent reform to protect patients and ensure that private health insurance provides value for money.
The State of Private Health Insurance
The AMA’s report showed that the number of private health insurance policies has increased, but the demand for gold-tier policies has fallen dramatically. Many Australians are opting for cheaper policies that exclude a range of services, such as maternity or psychiatric care. The report also found that gold-tier policies are susceptible to "phoenixing," where insurers close an existing policy and replace it with a nearly identical one at a higher price. This has led to a situation where many Australians are paying more for their private health insurance and getting less value in return.
Variations in Insurance Coverage
The report also uncovered significant variations in the amount insurers would pay for the same procedure. For example, the AMA found that there was an almost 30% variation in the benefits paid between two insurers for an uncomplicated childbirth. The amount an insurer will cover can also vary depending on where you live, with data showing that someone in New South Wales would get a higher benefit than someone in South Australia for cataract surgery. This lack of transparency and consistency in insurance coverage is making it difficult for Australians to make informed decisions about their healthcare.
The Need for Reform
The AMA is calling for urgent reform to address the issues facing the private health insurance sector. The organization wants insurers to return at least 90% of premiums to consumers in the form of treatment benefits and for an independent authority to oversee the health insurance sector. The AMA also wants the government to substantially boost funding for the public healthcare system, which has been weakened by decades of underfunding. The private sector is responsible for more than two in every three planned surgeries, and two out of every five hospital admissions, but the AMA argues that private healthcare was never intended to be the only option.
The Impact on the Public Healthcare System
The underfunding of the public healthcare system has had a significant impact on the ability of Australians to access healthcare. The AMA argues that the public system is "so neglected, underfunded, strained" that many people are being forced to choose private care that they may not be able to afford. This is not the situation that the AMA wants Australia to be in, where the private system is seen as a replacement for the public system rather than a supplement to it. The AMA wants to see the public system strengthened and the private system reformed to provide value for money and adequate coverage for all Australians.
The Response from Insurers and the Government
The report has landed in the middle of an increasingly turbulent relationship between private hospitals and insurers. Many private hospitals say they are on the brink of financial collapse as insurers are not passing on enough money to cover the rising costs of healthcare. Insurers argue that they have been paying out record amounts and must keep premiums affordable for customers. The Health Minister, Mark Butler, has signalled to private health insurers that he expects them to take "more strenuous efforts" to keep premiums as low as possible ahead of next year’s rise. The government has also stated that insurers and hospitals need to work together and take responsibility for driving change in the sector.
Conclusion
The AMA’s report highlights the need for urgent reform to address the issues facing the private health insurance sector. The organization is calling for insurers to return at least 90% of premiums to consumers in the form of treatment benefits and for an independent authority to oversee the health insurance sector. The government also needs to substantially boost funding for the public healthcare system to ensure that it remains fit for purpose. The AMA believes that getting the private sector right is critical to the health of Australians and that urgent action is required to address the issues facing the private health insurance sector.
