Australia’s peak representative body for the private health insurance industry has cautioned interest groups against reigniting the campaign to abolish low priced health cover, as consumers on those policies would face a premium increase of at least 16%.

Private Healthcare Australia CEO, Dr Rachel David said the Government’s decision to retain entry level policies as part of the PHI review was in the best interest of Australian consumers.

“The Government, in discussion with healthcare industry stakeholders, decided to retain lower priced products through the Gold/Silver/Bronze/Basic classification system and this reflects the fact that many Australians value the cover provided by these products,” she said.

“Basic cover has been a feature of Australia’s health care system since at least the 1960s and without it consumers choice of location and treatment options would be limited.

“Historically these products have been predominantly chosen by people in rural and regional Australia who have limited access to private hospitals, but need continuity of specialist care.

“They have also been used by people on lower incomes with chronic health conditions who are treated by specialists in a public hospital setting, for the same reason. There is a core group of mostly older people in this category who would be severely disadvantaged should they be forced to upgrade to more expensive products they don’t need.

“Many people have made a conscious decision to take out basic cover and have had it for a number of years. It would be cruel and unnecessary to force them to pay a higher premium, an increase of at least 16% or more.

“People on higher incomes who take the basic option often upgrade to higher value products when their health status changes and they need to claim. They are also making a positive contribution to the risk equalisation pool, which in itself puts downward pressure on premiums.

“What is most important, is that consumers fully understand what they are purchasing and make a decision that best meets their financial and health needs. This is being further addressed through the PHI reforms and PHA member funds are working with the Government to improve product transparency, standardise clinical terminology to define exclusions and introduce measures to help consumers navigate the system in an unbiased way to select products that meet their needs, particularly as they get older,” said Dr David.

Private Healthcare Australia is the peak representative body for Australia’s private health insurance industry. PHA represents 20 Australian health funds with a combined membership of 12.9 million Australians, or 96% of the sector on membership. Promoting the value of private health insurance to consumers in the Australian economy and keeping premiums affordable for our members is the number one priority of PHA members. PHA’s CEO Dr Rachel David is available for interview.

Media contact: Jen Eddy 0439 240 755

Reduction in inflated medical device benefits drives lowest premium increase in 17 years

Australian health funds have demonstrated their commitment to improving the affordability and value of private health insurance for their members by delivering the lowest average premium increase in 17 years.  This result has been made possible because of the Federal Government intervening to reduce grossly inflated medical device benefits on the Commonwealth Prostheses List, to be more consistent with real market value.

“For the past two years health funds have worked with the Federal Government and private health stakeholders to put downward pressure on premiums with positive results”, said PHA Chief Executive Dr Rachel David.

“The key driver of premium growth is increases in input costs such as the cost of medical devices, hospital accommodation, and provider fees charged by specialists and allied health providers. Private health insurers have limited control over these input costs, which limits their ability to constrain premium increases.  The Health Minister’s action to reign in medical device costs has been essential in helping keep premiums affordable.

“The PHI reforms announced recently by the Government, in particular reducing inflated Prostheses List benefits, have had a positive impact on the cost of premiums and delivered real benefits for consumers.

“The process started 12 months ago when health funds pledged that all savings from PL reform would be passed on to consumers via premiums that would be lower than expected. Last year the average premium increase of 4.8% was the lowest in a decade. Health funds have again guaranteed that all savings from PHI reform would be passed back to consumers and once again have delivered on that commitment.

“This year’s average increase of 3.95% is necessary to ensure health funds remain financially viable, meet statutory prudential requirements and, most importantly, continue to provide members with access to quality health care, as the population ages and people use health services more frequently.”

Private health funds are forecast to inject an additional $900 million into Australia’s health care system in 2017-18, bringing total expenditure on private health treatments to more than $20.7 billion.

The private sector continues to play a key role in Australia’s health system, performing about two-thirds of non-emergency surgery in Australia. 60% of all surgical procedures carried out in Australia are performed in private hospitals each year, including:

• 86% of retinal procedures
• 82% of other shoulder procedures
• 72% of knee reconstructions
• 71% of sinus and complex middle ear procedures
• 70% of lens procedures
• 66% of glaucoma and complex cataract procedures
• 66% of prostatectomies
• 65% of knee replacements

(Source: AIHW 2017)

The benefits paid out on behalf of their members by private health funds during 2016-17 totalled $19.834 billion, which was an increase of 4.5% on the previous 12 months. During 2016-17 the benefits paid on behalf of members included:

• $14.634 billion in hospital treatment – up 4.9 % on the previous year
  • $2.091 billion in payments for medical devices – up 4.8% on the previous year
  • $2.257 billion payments for medical specialists –up 4.2% on the previous year
• $4.922 billion in general treatment – up 4.1% on the previous year
  • $2.6 billion for dental treatment services – up 4.9% on previous year

“Health funds are consistently paying out the highest percentage of the premium back to customers of all insurance types – an average of 86c in the dollar (it has been above 85% for 15 years). This compares with 67c for property insurance and 64c for general insurance,” said Dr David.

“Profit margins have remained stable over the last decade running between 4.5 and 6%.  This is a modest return when compared with other forms of insurance and significantly below the returns made by private hospital groups and medical specialist practices. Net investment income increased from $290 million in 2015-16 to $544 million in 2016-17 and health funds net margin (profit margin) has gone down -0.27% from 5.45% in 2015-16 to 5.18% in 2016-17.

“Health funds are not hiding a pot of gold, they are committed to keeping premiums affordable for members and recognise the importance of working with hospitals, specialist health professionals and medical suppliers to establish premiums at a level which ensures members’ care can be funded if and when it is needed.

“More than 13.5 million Australians hold PHI and over half of those have disposable incomes under $50,000 per annum. Many of these are full pensioners and superannuants who are making considerable sacrifices to maintain their health insurance.

“Over 80% of people believe that they get value for money from their private health insurance and cite peace of mind, choice of specialist for continuity of care, choice of hospital, and timing of medical treatment as the main reasons. Keeping health insurance affordable benefits all Australians by keeping the pressure off the public hospital system.”

Private Healthcare Australia is the peak representative body for Australia’s private health insurance industry.  PHA represents 20 Australian health funds with a combined membership of 12.9 million Australians, or 96% of the sector on membership. Promoting the value of private health insurance to consumers in the Australian economy and keeping premiums affordable for our members is the number one priority of PHA members.  PHA’s CEO Dr Rachel David is available for interview.                       

 Media contact: Jen Eddy 0439 240 755

Australian health fund margins have remained stable at 4.5-6% over the last decade with funds consistently paying 86 cents in the premium dollar back to members to funds their healthcare.

Private Healthcare Australia Chief Executive, Dr Rachel David said the Leader of the Opposition’s statement that “some of the biggest health insurance providers pocket a return of over 20 per cent” was misleading and painting an inaccurate picture for health consumers.

“Quoting selectively the ROE (return on equity) as a measure of health fund profits does not provide a true picture. ROE is only one financial measure reported by some funds and it is not the same as profit. While ROE can provide security to members of funds that their health cover comes from a well-run business which can manage claims risk, looking solely at ROE does not provide an indication of the benefits private health insurers deliver for their customers and the broader health system”, said Dr David.

“PHA member funds operate using a variety of business models including not-for profit, private for-profit, publicly listed for-profit and combinations of the above. Regardless of the business model, health funds must be run successfully, manage risk appropriately, and abide by regulatory guidance on prudential standards. Net profit margins calculated by the industry regulator APRA confirm that margins have remained stable below 6% in recent years.

“This is a modest return when compared with other forms of insurance and significantly below the returns made by private hospital groups and medical specialist practices. There is only one reason premiums increase and that is because health funds are paying for more healthcare. There is no other explanation. There’s no pot of gold for the Leader of the Opposition or for others to find in Australian health funds,” said Dr David.

Private Healthcare Australia is the peak representative body for Australia’s private health insurance industry. PHA represents 20 Australian health funds with a combined membership of 12.9 million Australians, or 96% of the sector on membership. Promoting the value of private health insurance to consumers in the Australian economy and keeping premiums affordable for our members is the number one priority of PHA members. PHA’s CEO Dr Rachel David is available for interview.

Media contact: Jen Eddy 0439240755

“The Opposition Leader’s policy to fix premiums at 2% for the first two years of a Labor Government won’t fix the challenges facing Australia’s health system and will undo years of reform which is just starting to deliver real dividends to Australian consumers,” said Private Healthcare Australia CEO, Dr Rachel David.

“There is only one reason premiums increase and that is because health funds are paying for more healthcare. The introduction of a capped premium model will do nothing to address increasing utilisation of private and public health services. The key driver of premium growth is increases in input costs such as the cost of medical devices, hospital accommodation, and provider fees charged by medical specialists and allied health providers. Health funds are strongly committed to continuing to provide these services to members.

“Labor’s plan makes absolutely no economic sense and the longer-term impact on Australians and our health system could be disastrous. With hospital cost inflation at 5.2% for the private sector and 7% for public hospitals, the PHI industry regulator APRA could forced to agree to double digit premium increases after a two year freeze. If this is the way of the future, spending on hospitals and other services will have to be capped too, meaning people will miss out or need to wait for treatment even in private hospitals.

“The premium capping policy is also inconsistent with Labor’s explicit election policy of eliminating lower cost policies with exclusions. Deloitte modelling undertaken by the Department of Health in 2017 has shown this in itself is likely to increase premiums by 16%.

“An enforced premium pathway will immediately put at risk a number of small, employee-based and regional mutual heath funds who are already close to breaching prudential reserves. These health funds have been serving their local communities for decades and this election-focused policy will directly threaten their future and competition in the sector. With this level of interference bankruptcies will occur. Further, the Opposition Leader should explain how Labor intends to override APRA’s strict prudential requirements.

“Clearly another reactive pre election thought bubble, this policy will spark serious concerns throughout the entire business community in Australia. Where will this end? Will a Labor Government enforce price fixing and wage fixing across any sector it chooses to target, based on the latest poll?

“There has been no industry consultation. The private health insurance industry will strongly oppose this flawed policy in the interests of their members. There are 13.5 million Australians with private health insurance and research shows that while they are concerned about affordability, 80% value their PHI and want to keep it. This is because it gives them access to a greater range of medical treatments, at a time of their choosing, and with continuity of care from a fully trained medical specialist.”

Dr David said Labor’s plan to have a Productivity Commission review into PHI would no doubt reveal the same as every other PHI review that has been held in recent years – that premiums are rising at the same rate as growth in health care utilisation. There is no conspiracy about what causes health costs to rise. The economic effects of an ageing population living with chronic conditions, and the emergence of newer and better medical treatments have been well documented throughout the world. All countries and health systems are battling with rising costs as a result.

“Health fund margins have remained stable at 4.5-6% over the last decade with funds consistently paying 86 cents in the premium dollar back to members to fund their healthcare. There’s no pot of gold hidden in Australian health funds.

“We welcome the opportunity to work with Labor and health sector stakeholders to address the economic challenge of rising health costs, but this should be done in a considered way, using the best available data and evidence rather than on the fly,” said Dr David.

“The COAG agreement on public hospital funding and health reform has put the issue of improved transparency firmly on the agenda, and this is very much in the interests of patients,” the CEO of Private Healthcare Australia, Dr Rachel David said today.

“The issue of harvesting patients from Emergency Departments and pressuring them to go private is now firmly on the national political agenda and we welcome this initiative.  Public hospital cost-shifting to health funds adds more to premium costs than the average year’s premium increase. The issue of Emergency Department harvesting of private patients adds $1 billion a year to premiums and this is paid for mostly by pensioners and low income people with private insurance,” Dr David said.

“At best, this practice has led to anxiety and confusion in the mostly elderly medical patients affected about what they have agreed to, at worst, it undermines one of the most fundamental principles of Medicare – that patients treated in public hospitals should be prioritised on the basis of need, not the ability to pay.

“In recent years there has been a move within State Governments to raise funds by pressuring patients attending Emergency Departments to declare their private health insurance. This drives up the costs of premiums for all members, and means public patients need to wait longer ^[1]. This issue is not about the long- standing practice of private patients being treated on an elective basis in public hospitals because of the nature of their condition, or because it is where their specialist works. This practice refers to the aggressive trawling of public emergency departments to try and convert as many patients as possible to private status.

“The practice of trawling for private patients disadvantages the whole community. Many patients who intended to be treated as a public patient are signed up after they are admitted. The end result is PHI policyholders are now subsidising the costs of public hospitals, despite having already contributed to these through their taxes.

“Many people who have signed on the dotted line when they were at their most vulnerable, have subsequently complained to health funds they had not been seen by a specialist, and had been charged out-of-pocket costs in spite of being reassured this would not happen.

“State and Territory Governments received a 6.5% increase in their annual funding in the latest COAG Agreement. This compares with a 3.95% increase for PHI in 2018-19.  Public hospitals should be held accountable for how this money is spent and respect the rights of Medicare eligible consumers. The Medicare principles need to be adhered to and not undermined by stealth,” said Dr David.

Private Healthcare Australia has been urging the Government to introduce regulatory reforms to increase monitoring of private patient flows through public hospitals, and greater transparency on the care being provided. Consumers should also be provided with informed financial consent to avoid unexpected out of pocket costs; public hospitals should be required to share an appropriate level of data with health funds; and the practice of hospitals offering public patients financial incentives to use their PHI is inappropriate and should be banned.

Health funds are reassured by the attempts to address aggressive cost shifting at COAG, but for the sake of patients, and the integrity of the Medicare system, States and Territories need to follow through.

[1] AIHW 2017. Admitted patient care 2015–16: Australian hospital statistics. (Waiting time for public hospital elective surgery—42 days for public patients and 20 days for patients who used PHI to fund all or part of their admission).

Today’s APRA Quarterly Report confirms that health funds are delivering value for their members and returning the highest percentage of the premium back to members of all insurance types.

“Health fund profit margins were 5.16% in the 12 months to December 2017 and health fund profits have remained stable over the last decade running between 4.5 and 6%, significantly below the returns made by private hospital groups and medical specialist practices,” said Private Healthcare Australia CEO, Dr Rachel David.

“This report by PHI industry regulator APRA should leave no doubt that there is no pot of gold hidden in health funds,  and put an end to misleading statements that “some of the biggest health insurance providers pocket a return of over 20 per cent”.  (Opposition Leader Bill Shorten, NPC, 30 Jan 2018)

“PHA member funds operate using a variety of business models including not-for profit, private for-profit, publicly listed for-profit and combinations of the above. Regardless of the business model, health funds must be run successfully, manage risk appropriately, and abide by regulatory guidance on prudential standards. Net profit margins calculated by the industry regulator APRA confirm that margins have remained stable below 6% in recent years.

“Health funds are consistently paying out the highest percentage of the premium back to customers of all insurance types – an average of 86c in the dollar (it has been above 85% for 15 years). This compares with 67c for property insurance and 64c for general insurance.

“Health funds are committed to keeping private health insurance premiums affordable for members. There is only one reason premiums increase and that is because health funds are paying for more healthcare. The key driver of premium growth is increases in input costs such as the cost of medical devices, hospital accommodation, and provider fees charged by medical specialists and allied health providers.

“Public hospitals have just been guaranteed a 6.5% funding increase through the COAG process while in contrast this year’s average increase for PHI is 3.95%. This is necessary to ensure health funds remain financially viable, meet statutory prudential requirements and, most importantly, continue to provide members with access to quality health care, as the population ages and people use health services more frequently.”

Health funds paid a record $20 billion in benefits on behalf of their members in the 12 months to December 2017 which was an increase of 4.15% on the previous 12 months. This included:

• $14.86 billion in hospital treatment – up 4.0 % on the previous year
• $2.092 billion in payments for medical devices – up 1.9% on the previous year
• $2.297 billion payments for medical specialists –up 4.0% on the previous year
• $5.039 billion in general treatment – up 4.5% on the previous year
• $2.659 billion for dental treatment services – up 4.7% on previous year

Dr David said health fund benefits paid out for dental care has been increasing every year and despite consistent demands for more money from the Australian Dental Association there is no evidence of a downward trend in dental benefits.

“In fact, the proportion of total expenditure on dental services by health funds has increased from 14.0% in 2009-10 to 18.1% in 2015-16.  According to APRA health funds are paying $1 billion more in benefits for dental care than they were in 2010 ($2.66 billion in 2017 up from $1.6 billion in 2010).

“In contrast, the proportion of total expenditure on dental services by the Australian Government has decreased from 16.3% in 2009-10 to 15.9% in 2015-16. The proportion of total expenditure on dental services by State and Local Governments have decreased from  8.2% in 2009-10 to 7.7% in 2015-16; and, the proportion of total expenditure on dental services by Individuals has decreased from 61.1% in 2009-10 to 58.0% in 2015-16.”

Media contact: Jen Eddy 0439240755

Private Healthcare Australia CEO, Dr Rachel David, said Labor’s latest crack at the private health insurance industry only confirmed that health funds were paying the highest percentage of premium back to customers of all insurance types.

“It makes no sense as it simply proves what we have been saying all along. Health funds are consistently paying 86 cents in the dollar back to their members in the form of benefits (it has been above 85 cents for 15 years) and this compares with 64 cents for general insurance.

“The figures also verify that there is no pot of gold hidden in health funds. Health fund profit margins were 5.16% in the 12 months to December 2017 and health fund profits have remained stable over the last decade running between 4.5 and 6%, significantly below the returns made by private hospital groups and medical specialist practices.

“When a fund unexpectedly earns more than this, the surplus is paid back to members as seen recently with Medibank’s announcement of a $20 million loyalty bonus following the half year financial results.

“Industry regulator APRA has stated repeatedly there is no evidence of health funds over-earning or retaining inappropriate levels of member funds. Health funds paid a record $20 billion in benefits on behalf of their members in the 12 months to December 2017, which was an increase of 4.15% on the previous 12 months.

Expenditure of remaining premium earnings includes:

1. Management of business and regulated prudential reserves
2. Member services which are highly valued by members:

– low cost subsidised dental and optical – provided by most funds often at one point of service to assist elderly members

– call centres and online support – member support to help consumers choose and use their health insurance and service provision – preventive counselling for physical and mental health

– health and wellness activities – free exercise classes, preventive health and group fitness activities

– care planning for members with complex needs who require admission to hospital, including hospitals visits

– in-pharmacy preventive care, for example free flu vaccines for members

“Health funds are committed to providing these services for their members while keeping premiums affordable. There is only one reason premiums increase and that is because health funds are paying for more healthcare.

“The only pathway to lower premium increases is better management of input costs, ensuring fraud, waste, over-pricing of medical supplies and low-value care are eliminated from private healthcare.  This can only be achieved with the support of Australian governments and regulators.

“The introduction of a capped premium model as proposed by Labor will do nothing to address increasing utilisation of private and public health services.  It makes absolutely no economic sense and the longer-term impact of their policies on both our private and public health systems could be disastrous,” said Dr David.

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Media contact:  Jen Eddy 0439240755

Private Healthcare Australia’s CEO Dr Rachel David says the majority of medical specialists in Australia try to the right things by their patients, but she has advised consumers to ask for quotes up front in advance of surgery.

Responding to media reports about excessive out-of-pocket costs, Dr David said most specialists are aware that patients are in a vulnerable position when discussing the potential costs of treatment, but there are exceptions.

“Many patients are able to have their treatment with no gap or a known gap, but it pays to be prepared well in advance of surgery,” she said.

Patients who are concerned about high co-payments need to do the following things if they have been told they need a medical procedure:

1. Talk to your GP. Your GP needs to be aware costs are a concern, so they can help you find a low-charging specialist;
2. Talk to your health fund. Most health funds have websites and other tools available, which list specialists covered by their GapCover schemes, who charge either no gap, or a known gap;
3. When you have consulted a specialist about treatment, ask for a quote up-front which contains all likely out-of-pocket costs, including the anaesthetist, surgical assistant and diagnostic tests;
4. After surgery, if you have had complications or there are unexplained charges on the bill, do not pay it until there has been an explanation from your doctor (not a receptionist or practice manager). If you do not get this, a patient advocate may be able to help. In some circumstances patients may not be liable to pay for complications which have occurred;
5. For people living in some areas where doctors traditionally have charged high gaps, particularly in wealthier neighbourhoods, they may need to travel outside of their immediate area to access cheaper options.

“Importantly patients should be aware that there is absolutely no correlation between higher priced surgery and quality.

“Health funds do their best to cover the gap for most surgical procedures, but they are unable to chase fees which continue to escalate above inflation, without causing premiums to go up for everyone. Transparency around fees and charges is critical for the sustainability of the private health system, which provides over two thirds of elective surgery in Australia,” said Dr David.

Private Healthcare Australia has called for increased transparency across the medical device supply chain in response to Senate Inquiry report into the “number of women in Australia who have had transvaginal mesh implants and related matters”.

PHA Chief Executive, Dr Rachel David, said the report highlighted the need for a more rigorous evidence base to ensure that medical devices are safe for patients, including effective post‐marketing surveillance on all implants and formal registry data for new implants.

“Better post-marketing surveillance will help to avoid these adverse events in future, ensure they can be quickly identified and addressed in the interests of patient safety,” Dr David said.

The report identifies hundreds of women who have been adversely affected by transvaginal mesh devices that were on the Australian Register of Therapeutic Goods and the Prostheses List over a period of many years.

“Private Healthcare Australia supports the reforms the Federal Government has already made to the Prostheses List, including bringing down the cost of medical devices from grossly inflated levels, but more needs to be done to shine a light on practices across the medical device supply chain,” she said.

“Health funds want stricter controls on the support and other benefits provided by manufacturers and suppliers to providers, and controls on the use of sales representatives, particularly their presence in operating theatres without patient consent, and their use in training surgeons and staff.

“The attendance of sales reps during surgical procedures escalated dramatically since the Prostheses List appeared in its current form in 2006. The seriousness of this issue has been highlighted by this inquiry. The unregulated use of reps in routine cases is at best a costly waste of money and at worse, unsafe. When additional services are clinically relevant they should be costed separately in the interests of transparency.

“Health funds are of course willing to pay for additional services when they are clinically relevant to the patient, however funds are concerned that their members are being charged more so some medical device company sales reps can attend surgical procedures to promote the device. Under no circumstances should health fund benefits be used to support sales activities of manufacturers where there is no patient benefit.

“Introducing a reporting system, not unlike that operating in relation to pharmaceuticals where Medicines Australia discloses support, incentives and other benefits provided to prescribing doctors, is essential to both price the support given by manufacturers to providers annually and better understand the nature of the support and benefits provided.

“It makes no sense that Australia has a rigorous system for disclosure of benefits paid to providers by multinational pharmaceutical companies, but not medical device companies. A patient can stop taking a medicine that is harming them, but once a medical device is implanted in the body it can be difficult or impossible to remove.

“Mesh products have irreversibly harmed hundreds of women, so it is clear industry self-regulation is not working. This is not the first large-scale scandal involving implantable devices and it will not be the last unless the government acts now to require full disclosure of inducements and benefits supplied to doctors and hospitals.

“Such controls will bring the transparency of the medical device supply chain into line with what is expected of similar industries. It is also critical that devices found to be unsafe are removed from the Prostheses List at the same time they are removed from the ARTG, so that patients are not harmed,” said Dr David.

Media contact: Jen Eddy 0439 240 755

“Private Health Insurance gives consumers the peace of mind to know exactly when they can be admitted for surgery and other essential medical treatments and that is why the vast majority of consumers value it despite concerns about affordability,” according to Private Healthcare CEO Dr Rachel David.

Dr David said while this year’s average premium increase of 3.95% was the lowest in 17 years, no one liked to see premiums rise and the PHI industry had demonstrated its commitment to improving affordability by returning savings from medical device reform to health fund members.

“More than 13.5 million Australians hold PHI and over half of those have disposable incomes under $50,000 per annum. Many of these are full pensioners and superannuants who are making considerable sacrifices to maintain their health insurance.

“We know more than 80% of people with PHI believe they get value for money and in addition to the timing of medical treatment they cite choice of specialist for continuity of care and choice of hospital as the main reasons, however affordability is their greatest concern. (Ipsos)

“There is only one reason premiums increase and that is because health funds are paying for more healthcare. The only way to put downward pressure on premiums as utilisation goes up is to address wasteful input costs – fraud, over servicing, inflated prices for medical devices, low value care.

“The key driver of premium growth is increases in input costs such as the cost of medical devices, hospital accommodation, and provider fees charged by medical specialists and allied health providers and health funds have limited control over these input costs.

“Affordability is an issue across the health system. Public hospitals have been guaranteed a 6.5% funding increase through the COAG process while in contrast this year’s average increase for PHI is 3.95%,” said Dr David.

In addition, a range of Government budget settings introduced over the last seven years have had a significant detrimental impact on the affordability of PHI for many Australians.

These include:

• means-testing the rebate introduced in the 2009-10 Budget;
   
• indexation to CPI, uncoupling the rebate from the cost of premiums, legislated in 2012;
   
• removal of the rebate from LHC loadings, announced in 2009-10 Budget; and
   
• freezing the income thresholds for rebate eligibility at 2014-15 levels through 2020-21.

“The private sector continues to play a key role in Australia’s health system, performing nearly two-thirds of non-emergency surgery in Australia. 60% of all surgical procedures carried out in Australia are performed in private hospitals each year,” Dr David said.

“Overall, Private Health Insurance pays for 67% of all same day mental health treatment with or without ECT and 47% of all mental health admissions, 58% of all joint replacements and 61% of all chemotherapy treatments in Australian hospitals. 86% of retinal procedures take place in the private sector. In addition, under ancillary cover, health funds last year paid out nearly $2.66 billion for dental care, more than the Federal Government. Last year alone, health funds subsidised 40.9 million dental services.

“Profit margins have remained stable over the last decade running between 4.5 and 6%. This is a modest return when compared with other forms of insurance and significantly below the returns made by private hospital groups and medical specialist practices.

“Health funds are not hiding a pot of gold, they are committed to keeping premiums affordable for members and recognise the importance of working with hospitals, specialist health professionals and medical suppliers to establish premiums at a level which ensures members’ care can be funded if and when it is needed.

“Health funds are consistently paying out the highest percentage of the premium back to customers of all insurance types – an average of 86c in the dollar (it has been above 85% for 15 years). This compares with 67c for property insurance and 65c for general insurance.”

Dr David said consumers should carefully consider the value proposition of private health insurance before re-evaluating their health cover.

“These days, few people can afford the uncertainty of having to wait an unknown length of time to get a painful or disabling condition treated. Whether it’s a sporting injury that stops you driving your car, failing vision stopping you safely caring for family, or a child with an eating disorder who is missing school – these are all medical conditions that can’t wait without causing real social and economic consequences.”

Media contact: Jen Eddy 0439240755

Private Healthcare Australia CEO Dr Rachel David said Labor’s failure to guarantee the future of the Private Health Insurance Rebate (Catherine King, Sky News 2 April 2018) will cause great concern among low and middle income earners and older Australians who value their private health insurance.

“The means-tested PHI rebate is paid to individuals on low and middle incomes to help them access non-emergency surgery, mental health care and dental care among other medical procedures. It is not paid to health funds.

“About 50 per cent of people with private health insurance have an annual income of under $50,000 a year. The majority of those are either full pensioners, part pensioners or superannuants on low incomes and these people will be hardest hit by further change.

“Low and middle income earners are already experiencing the impact of changes to the rebate which is now about 25.5%, not 30%. A range of Government budget settings over the past 8 years has seen the steady erosion of the rebate:

• means-testing the rebate introduced in the 2009-10 Budget;
• indexation to CPI, uncoupling the rebate from the cost of premiums, legislated in 2012;
• removal of the rebate from LHC loadings, announced in 2009-10 Budget; and
• freezing the income thresholds for rebate eligibility at 2014-15 levels through 2020-21.

“Health funds pay for close to two-thirds of all essential non-emergency surgery, 56% of mental health admissions and 40 million dental services per year. There is no ‘Plan B’ explaining how all these services will be funded should the system fail, and people who have paid their taxes and health fund premiums all their lives need reassurance the system will be there for them when they need it.

“The PHI Rebate allows a greater proportion of the population to access private health care, which benefits the wider community by reducing waiting times in public hospitals. A healthy private sector is essential to the sustainability of Australia’s health system and the Private Health Insurance rebate is a key component of this.”

Dr David said a recent media report about the removal of Benefit Limitation Periods (BLPs) was also causing unnecessary concern.
“This conspiracy-laden report is simply fake news and unfortunately achieves nothing other than causing worry for health fund members.

‘When the Department of Health started to look into the legislation around BLPs as part of the PHI reform process, it found in 2007 it had made a minor mistake in the drafting of that legislation which needed to be fixed. But regardless of that, health funds are already engaged in a process to streamline products to make it easier for consumers to choose their health insurance. As part of this reform process it has been agreed BLPs will be phased out. No consumers have been negatively affected at all by this.”

Australia’s peak body representing the Private Health Insurance industry says Labor should clarify how many policies will have the PHI rebate removed and how many low income earners will be hit with big premium increases caused by this policy change.

“Labor must explain the changes it has “already announced” to the Private Health Insurance Rebate for the sake of millions of low-income earners who value their PHI. After refusing to rule out further changes to the rebate on Monday (Catherine King, Sky News 2 April 2018), Labor issued a clarification saying there would be no changes in addition to what had already been announced,” said Private Healthcare Australia CEO Dr Rachel David.

“In the media today Labor said it would remove the rebate on so-called junk policies, but to date no-one has explained how a ‘junk policy’ is defined. Labor should come clean and explain how many policies are affected, who will be impacted, and by how much premiums will increase in the future as a result of this measure.

“How will this affect the 250,000 pensioners with an annual income of less than $30,000 and the 125,000+ retirees living off their superannuation with an annual income of less than $50,000? It is not just older Australians who will be affected by Labor’s rebate measures. More than one quarter of all people with PHI (27%) have an annual income under $30,000 and almost half of all people with PHI (47%) have an annual income of $50,000.

“The rebate helps to keep premiums affordable, encourages Australians to take out private health cover and eases pressure on the public hospital system.

“The means-tested PHI rebate is paid to individuals on low and middle incomes to help them access non-emergency surgery, mental health care and dental care among other medical procedures. It is not paid to health funds.

“Many Australians, particularly in regional areas have accessed the benefits of private health insurance for many years by taking out basic table policies. This gives them continuity of care by a fully trained specialist in their local public hospital. What is Labor’s plan for this sector and how will they make up the funding shortfall to regional public hospitals?

“The PHI Rebate is a critical component of Australia’s health system. Labor needs to issue a further clarification so Australians can be clear on what exactly their plan is for private health insurance.

“This is the least people who have paid the taxes and health fund premiums over many years should expect,” said Dr David.

Media contact: Jen Eddy 0439 240 755

Private Healthcare Australia CEO, Dr Rachel David, said the Government’s response to the latest MBS Review Taskforce recommendations was an endorsement of evidence-based healthcare in Australia and would lead to better health outcomes and value for consumers.

“The PHI industry has long supported this clinician-led review which makes recommendations to the Government on how the MBS can be modernised to improve patient outcomes, safety and reduce waste,” said Dr David.

“Health funds want to ensure their members are getting value for money and to reassure them their premiums are not being spent on low value treatment.

“The more low-value tests and treatments are eliminated, the easier it will be to keep downward pressure on premiums, and invest members’ funds in procedures which really work.

“Under legislation health funds are obliged to pay for medical treatments covered by the MBS. This Review will not only highlight the importance of clinical best practice and improve patient care, but importantly reduce waste across the health system.

“Health funds will work with Government to ensure there is compliance with the MBS schedule. It is an excellent focus on evidence-based healthcare and will be supported across the health sector,” she said.

Dr David said the latest recommendations which included changes to the MBS items for spinal surgery to reflect contemporary surgical practice would ensure patients will receive rebates for spinal surgery services that are clinically appropriate and reflect modern clinical practice.

Other accepted recommendations include:

• Limiting the ability of GPs to request knee MRIs for patients over 50 years and to align the number of services that can be requested by GPs with specialists. Specialists will still be able to request knee MRIs for all patients. These changes will reduce unnecessary MRIs and help ensure patients are receiving the right test, at the right place, at the right time;

• Amendments to ensure patients aren’t undergoing painful procedures to have skin lesions removed when it isn’t clinically necessary.

Dr David said the recommendations accepted by the Government which included 38 in full and two in part, would continue modernise the MBS system and deliver an improved health system for all Australians.

Media contact: Jen Eddy  0439 240 755

The Turnbull Government’s 2018-19 PHI Budget measures demonstrate its commitment to making quality healthcare more accessible and affordable for all Australians.

The Government’s response to taskforce recommendations from the Medicare Benefits Schedule Review will ensure best clinical practice and save $189.7 million over three years.

PHA Chief Executive Dr Rachel David said the review was delivering evidence-based healthcare in Australia, better health outcomes for patients and value for consumers.

“The PHI industry has long supported this clinician-led review as every dollar of waste and every episode of inappropriate practice threatens the sustainability of private health. Eliminating as much low-value care as possible is a crucial measure in the challenge to improve affordability and keep downward pressure on premiums.

“There is only one reason premiums increase and that is because health funds are paying for more healthcare. The only way to put downward pressure on premiums as utilisation goes up is to address wasteful input costs – fraud, over servicing, inflated prices for medical devices, low value care.

“Health funds want to ensure their members are getting value for money and to reassure them their premiums are not being spent on low value treatment. Under legislation health funds are obliged to pay for medical treatments covered by the MBS. Reducing payments for procedures that aren’t effective ensures both health fund members and taxpayers’ funds are being used appropriately.

“The impact of the MBS Review will be enhanced by the Government’s new Medicare compliance measures establishing a robust mechanism to manage compliance in the MBS program, and to ensure services are provided appropriately.

“These measures will better target investigations into fraud, inappropriate practice and incorrect claiming using data analytics and behavioral driven approaches to compliance.”

“Eliminating improper and fraudulent claims could deliver savings of more than $1 billion to the Government and to private health consumers through lower premiums.

“Appropriate data sharing to improve MBS and health fund claim compliance, as well as measures to reduce or eliminate low‐value care have the potential to save 2‐3% in each treatment modality for which benefits are paid.

“Health funds will continue to work closely with the Government to ensure the sustainability of the PHI industry. PHI pays for close to two thirds of non-emergency surgery in Australia including  86% of retinal procedures, 70% of day admissions for mental health care,  60% of all joint replacements, 56% of major procedures for malignant breast disorders, and 50% of all mental health care  (Source: AIHW 2017)

“More than 13.5 million Australians rely on private health insurance for security and peace of mind, so they can access healthcare when and where they need it, however premium affordability is their major concern. Almost half of them have an annual income of less than $50,000.

“Over 80% of people believe that they get value for money from their private health insurance and cite peace of mind, choice of specialist for continuity of care, choice of hospital, and timing of medical treatment as the main reasons. Keeping health insurance affordable benefits all Australians by keeping the pressure off the public hospital system,” said Dr David.

Media contact: Jen Eddy 0439240755

Private Health Insurance reforms have had a positive impact on PHI membership with the latest APRA figures showing an extra 50,000 Australians have taken out health cover in the 12 months ending March 2018. There is now a record 13.58 million Australians with either hospital cover, extras or both.

Private Healthcare Australia CEO Dr Rachel David said APRA’s data corrects a flawed Roy Morgan survey that claimed 250,000 people chose to drop PHI over the past year.

“This assessment is far from the truth. In fact more Australians than ever currently hold PHI. What people say they might do and what they actually do can be quite different and our research has repeatedly shown than 80% of people with PHI value it and want to keep it”, said Dr David.

“Of course members are concerned about rising premiums and out-of-pocket medical costs but they also understand that premiums are rising because the funds are paying for more healthcare. The only way to reduce premiums meaningfully is to reduce wasteful input costs.

“The Government has made a start by implementing long-awaited reductions in inflated medical device benefits and this year the average premium increase of 3.95% was the lowest in 17 years.

“There is more to be done and we are working with the government and stakeholders to improve affordability by addressing issues such as cost-shifting from the public sector, low-value and wasteful care, fraud and compliance issues with the MBS.

“In addition the Government has an expert committee working on a transparency-based solution to out-of-pocket costs, so GPs can assist patients to find an appropriately qualified low-charging specialist.”

APRA figures for the 12 months ending March 2018 show a decrease of 36,745 people with hospital cover, however the March quarter saw an increase of 10,481 insured persons. 45.5% of the population currently has hospital cover.

There was an increase of 52,980 people with general treatment (extras) cover in the 12 months ending March 2018, with an increase in the March quarter alone of 46,792 people.

Total health fund coverage was up by 54,052 people in the 12 months ending March 2018 with an increase of 47,176 over the last quarter.

Health funds have reached another milestone this year, paying a record $20.1 billion in PHI claims, an increase of 3% on the same period last year.

Media contact: Jen Eddy 0439240755

“The harvesting of patients from public emergency departments and pressuring them to go private, risks undermining Medicare and the Australian health system,” said Dr Rachel David, CEO of Private Healthcare Australia.

“The AIHW Report shows that the median wait time for elective surgery for public patients (42 days) in public hospitals is twice as long as that of patients using private health insurance to fund all or part of their admission (21 days).

“This discriminating practice by public hospitals has been highlighted as an issue of national concern but the latest AIHW Report Admitted patient care 2016-17: Australian Hospital Statistics shows no sign that public hospitals are reducing their cash grab from the private sector.

“The report shows that admissions to public hospitals are growing faster than admissions to private hospitals, and that 1 in 7 admissions (14% or 912,000 admissions) were for patients who used private health insurance.”

Dr David said the State Government policy to raise funds by pressuring patients to use their private health insurance was disadvantaging both the public and private sectors.

“As a result of this cash grab, public patients are waiting longer for their surgery in public hospitals and the practice adds more than $1 billion to the cost of health fund premiums per year, paid for mostly by pensioners and low income people with private health insurance.

“At best, this practice has led to anxiety and confusion in the mostly elderly medical patients affected about what they have agreed to, at worst, it undermines one of the most fundamental principles of Medicare – that patients treated in public hospitals should be prioritised on the basis of need, not the ability to pay.

“State and Territory Governments received a 6.5% increase in their annual funding in the latest COAG Agreement. This compares with a 3.95% increase for PHI in 2018-19. Public hospitals should be held accountable for how this money is spent and respect the rights of Medicare eligible consumers. The core Medicare principle of prioritising patient care on clinical need and not ability to pay should be adhered to and not undermined,” said Dr David.

Private Healthcare Australia Chief Executive Dr Rachel David has called for a whole-of-sector commitment to increase transparency and tackle escalating out-of-pocket costs faced by consumers in the private health sector.

The need to challenge growth in out-of-pocket medical expenses for consumers has been highlighted by the ABC’s Four Corners program.

Private Healthcare Australia contributed to the investigative report, which sought to expose the extent to which unexpected and unexplained out-of-pocket expenses are undermining the private healthcare system.

PHA’s Chief Executive Dr Rachel David said despite health funds having no legal influence over specialists’ fees and charges, consumers often blamed them for gap payments.

“Health fund data shows while the majority of private health services provided in-hospital are no-gap, for those that do attract a gap fees, they are rising at well above the rate of inflation,” she said.

“Furthermore, many consumers do not realise health funds are prevented by law from insuring services that occur out-of-hospital, like visits to specialists, pathology tests and scans.

“The Australian Medical Association’s national conference at the weekend condemned specialists charging exorbitant out of pocket fees as well as the practices of booking fees and bill splitting as these do not reflect clinically relevant services.

“Health funds do not have the levers to stop this and therefore stakeholders need to work cooperatively to call for Federal Government intervention. This issue must be addressed urgently as the growing trend towards crowd-funding to fund surgery in Australia should be a red flag that all is not well.

Dr David said health funds were calling for:

• transparency on medical out-of-pocket costs so GPs and consumers could choose specialists based on price and quality ahead of the referral process;

• a clear complaints process with a single agency responsible to assist consumers who have been stuck with an inappropriate medical bill;

• fees and charges not associated with a clinically relevant service to be made illegal in circumstances where the MBS and health fund GapCover are also billed;

• an education initiative to ensure consumers understand why some specialists charge so much, and that it is not correlated with the quality of the treatment, or the likelihood of a good outcome.

“We have one of the best health systems in the world however the reputation of the private health sector is being undermined by a minority. Most surgeons and procedural medical specialists are highly skilled professionals who try and do the right thing by their patients, but there are exceptions.

“Consumers should be aware there is no correlation between the out-of-pocket cost and the quality of the specialist. There are many excellent specialists who provide services for no gap at all, or a known gap.”

Dr David said there were a number of steps consumers could take to protect themselves against high out-of-pocket costs if they needed surgery:

1. Talk to your GP. Your GP needs to be aware costs are a concern, so they can help you find a low-charging specialist;
2. Talk to your health fund. Most health funds have websites and other tools available, which list specialists covered by their GapCover schemes, who charge either no gap, or a known gap;
3. When you have consulted a specialist about treatment, ask for a quote up-front which contains all likely out-of-pocket costs, including the anaesthetist, surgical assistant and diagnostic tests;
4. After surgery, if you have had complications or there are unexplained charges on the bill, do not pay it until there has been an explanation from your doctor (not a receptionist or practice manager). If you do not get this, a patient advocate may be able to help. In some circumstances patients may not be liable to pay for complications which have occurred, or fees which are not associated with a clinically relevant service;
5. For people living in areas where doctors traditionally have charged high gaps, particularly in wealthier neighbourhoods, they may need to travel outside of their immediate area to access cheaper options

“Private Healthcare Australia is committed to working with stakeholders and the Federal Government to foster greater transparency on medical-specialist and out-of-pocket costs on behalf of Australian consumers,” said Dr David.

Media reports that women will only be covered for breast cancer treatment under the most expensive health fund policies are wrong, PHA Chief Executive Dr Rachel David said today.

“These claims cause unnecessary concern and stress for health consumers.

“Health funds have worked with the Government, hospitals, doctors and consumers to develop a plan that makes it easier for people to choose and use the products that are already available, which will be released in coming months.

“The aim of the gold silver bronze classification is to make it easier for consumers to understand the products on offer by health funds. It is a classification system aimed at improving transparency for consumers.

“Health funds have not agreed to change what is already covered in existing products. This sort is scaremongering does nothing more than cause stress for people already concerned about their healthcare.

“I urge consumers to contact their health fund if they need to clarify anything about their policy and not to rely on unsubstantiated claims,” said Dr David.

Media contact: Jen Eddy 0439240755

The CEO of Private Healthcare Australia Dr Rachel David has confirmed Australia’s smaller regional and employee-based health funds will be under threat in the immediate future, if premium increases are arbitrarily capped at 2%.

“If something sounds too good to be true it usually is, and Labor’s 2% premium cap policy is no exception. The reason premiums increase is because health funds are paying for more healthcare. The reasons for this are the same as in the public system – an ageing population and advances in medical science,” said Dr David.

“The introduction of a capped premium model will do nothing to address increasing utilisation of private and public health services. The key driver of premium growth is increases in input costs such as the cost of medical devices, hospital accommodation, and provider fees charged by medical specialists and allied health providers.

“Health funds desperately want to offer lower premiums and higher value, but this can only be done if Government and stakeholders work cooperatively to drive down input costs and address inappropriate regulation.

“A collaborative process to address affordability has been underway for the past two years and this has delivered results with this year’s premium increase of 3.95% being the lowest in 17 years. It would be unfortunate to abandon this process for short term electoral purposes, which could have serious unintended consequences like the demise of some of our oldest not-for-profit funds.

“An enforced premium pathway will put at risk a number of small, employee-based and regional not-for-profit heath funds who are already close to breaching prudential reserves. These health funds have been serving their local communities for decades and a 2% premium cap will directly threaten their future and competition in the sector.

“Decision makers should consider the impact of this on regional communities, jobs and older Australians who have relied on their local health fund for security and peace of mind for decades,” she said.

A recent study by social policy research firm, Evaluate, confirms the impact of a 2% cap will have far reaching consequences for Australia’s health system, “…introducing a period of price capping in isolation – without simultaneously addressing the rising costs of health services – will threaten the sustainability and long term affordability of private health.”

Evaluate’s analysis found that the outcome of the 2% cap would result in:

• 8 of the 33 health funds would be in deficit or running at a loss in their current year of expenditure growth in year 1, whilst 26 would be in deficit at APRA’s 98% sensitivity standard (if there were a substantial increase in costs);
• 15 funds would be in deficit at their current level of expenditure growth in year 2, and 31 at the 98th percentile;
• Further in year 2, 3 funds would be not only in deficit but would need to use more than 100% of their capital reserves if they faced expenditure growth at the 98th percentile. This is insolvency and the greatest stress is on the largest funds.

“This study verifies that profit margins are not adequate to enable funds to bear the price cap. Health funds are not hiding a pot of gold; margins have remained stable at 4.5-6% over the last decade with funds consistently paying 86 cents in the premium dollar back to members to funds their healthcare. This is a modest return when compared with other forms of insurance and significantly below the returns made by private hospital groups and medical specialist practices.

“Private Healthcare Australia is working with Government, policy developers and health sector stakeholders to address the economic challenge of rising health costs, but this should be done in a considered way, with affordability for consumers and private health sector sustainability at the forefront,” said Dr David.

Media contact: Jen Eddy 0439240755

“Revelations by the ABC 7.30 Report yesterday about secret rebates paid against cardiac device benefits must be swiftly dealt with by the Federal Government. The regulation of transparency in the medical device market must dramatically improve,” CEO of Private Healthcare Australia Dr Rachel David said today.

“This is a clear indication medical device prices in the private sector are still overvalued, putting upward pressure on health fund premiums for all health fund members, and exposing patients to the risk of over-servicing and unsafe care, as the incentives are wrong.”

“The Federal Government has taken an important first step by decreasing mandated benefits for cardiac devices by 30% over 2 years, but we need a proper system of mandated price disclosure and reference pricing to bring the medical device market in line with the pharmaceutical sector”

“This means device benefits will reflect real market prices, and the real sale price and any cash or other benefits paid to providers must legally be disclosed by the device companies.”

“People seem to forget the medical device benefit paid for Prostheses List implants comes from money which belongs to health fund members. Not one cent of this should be paid out for anything other than direct patient care. Under the current system, it seems nameless third parties are still accessing these funds in the form of undisclosed deals and kickbacks” Dr David said.

“Health fund premium increases are the major reason people are reconsidering their commitment to private health insurance. Forcing health fund members to pay more than is necessary for common medical devices like pacemakers will ultimately damage the whole private health sector, including hospitals, as the system becomes less affordable”

“As an ageing population means more medical devices are being implanted than ever before, the government must act as soon as possible to shine a light on rebates, kickbacks and other inappropriate practices in this sector, to keep private health viable in future.”

Media contact: Ben Hamilton 0407 331 067