Private Healthcare Australia, the peak industry body for Australian private health funds, has welcomed the Federal Government’s new classification scheme for private health insurance.

“This new system marks a major improvement to how consumers choose and use their private health insurance,” CEO of Private Healthcare Australia, Dr Rachel David said today.

“Over a two year period we have gone through health fund products line by line to classify them into Gold, Silver, Bronze and Basic categories depending on the cost of the product, and the level of cover provided.

“This has been a complex process and a balancing act, because we need to ensure consumers have access to products which are both affordable, and provide value for money across all life-stages.

“We have been careful not to unintentionally increase complexity, or introduce product changes that would either increase premiums or reduce coverage unnecessarily.

“A media report today claiming women and families will need to pay more for obstetrics cover is incorrect.  Obstetrics is a high-risk, high cost treatment area currently only covered in top hospital cover.  The inclusion of obstetrics in the ‘Gold’ tier reflects the current state of the market and will not alter premiums.

“A key part of this new system is the retention of the Basic tier which ensures there is an affordable option for people in rural and regional Australia who want continuity of care from a private specialist, but only have access to a public hospital.

“The Basic and Bronze tiers also provide affordable entry-level products for younger, healthier people who frequently go on to upgrade as they get older and their life circumstances change.

“The key issue with the lower cost tiers is effective communication to consumers about what is and isn’t covered so they know what they are buying.  The new classification and information system addresses this.

The classification process, developed and agreed by the Private Health Ministerial Advisory Council (PHMAC) has modified or eliminated some historical features of health fund products which have been confusing to consumers, like restricted cover in the higher tiers, and benefit limitation periods.

Information about the new product tiers and the treatments covered by health fund products will be provided to health fund members in the first half of 2019.

“Health funds acknowledge transparency of costs and services to consumers in the private health system has been perceived as inadequate, and this new system takes a much-needed step towards putting the consumer and the patient back in control,” Dr David said.

“PHA and our member health funds are looking forward to the introduction of additional measures to help consumers and their GP choose medical specialists based on price and qualifications.

“A fully transparent private health system, where the consumer is in control of their choices, is one that will be stronger and more sustainable in future.”

ENDS

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.          

Media contact:

Celia Moore, 0432 344 069

Health funds are playing an increasingly important role in ensuring Australians have access to high quality dental care, according to Private Healthcare Australia Chief Executive, Dr Rachel David.

“In Dental Health Week it is worth noting that health funds are paying more than ever before for dental services in Australia, and more than both the Federal and State Governments. APRA’s latest dental service data reported that more than 41 million dental services were funded by health funds in the 12 months ending March 2018.

“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 the most recent figures (AIHW). 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, and expenditure by State and Local Governments has decreased from 8.2% in 2009-10 to 7.7% in 2015-16.

“Health funds pay more than $2.6 billion per annum in dental benefits. 90% of dental health services provided to low and middle income earners are subsidised by health funds. 60% of dental treatments/services in hospitals which typically involves dental extractions and restorations are also paid for by health funds.”

Dr David said innovation in the sector was driving the improvements being delivered by dentists and funded by health funds.

“Increasingly health funds are contracting with dentists and vertically integrating with dental practices, thereby consolidating and creating economies of scale. This is driven largely by a need to standardise quality and reduce out-of-pocket costs for consumers.

“Traditionally, dental care has been a cottage industry, with large variability in costs for the same service. Approximately 85% of dentists work in the private sector in their main practice, ranging from 91% in the Australian Capital Territory to 70% in the Northern Territory. By contracting dentists, health funds have been able to reduce uncertainty about out-of-pocket costs, and have been able to provide preventive dental services with no gaps in many cases.

“A report by Health Workforce Australia in 2014, identified there is an oversupply of dentists in Australia until at least 2025, which is particularly acute in urban areas. Younger dentists in particular are attracted to work with health funds so they can access a guaranteed patient flow and build up a practice. The funds have used this dynamic to promote fee transparency and lower out-of-pockets for contracted dentists,” said Dr David.

The Senate’s decision to pass the Private Health Insurance reforms today signals widespread support for Australian health funds’ commitment to work with government, hospitals, consumers and specialist doctors to improve the affordability and value of PHI for 13.5 million members.

PHA Chief Executive, Dr Rachel David said this was an important day for Australia’s health care system as the PHI reform package would improve transparency in private health, and make it easier for consumers to choose and use their health insurance.

“Health funds have worked together with the government and private health stakeholders for more than two years to deliver this vital package of reforms. In doing so we have gone through health fund products line by line to ensure we are keeping the balance of affordability and value for money for consumers choosing private health.

“By supporting the Private Health Insurance Legislation Amendment Bill 2018, the Senate has contributed towards ensuring the sustainability of Australia’s highly regarded mixed private-public health system. Keeping private health sustainable ultimately benefits all Australians by keeping pressure off the public hospital system,” said Dr David.

“Support for the Gold, Silver, Bronze, Basic classification system will eliminate features of the system that consumers have found confusing, improve transparency and make it simpler for consumers to use their PHI. The Private Health Ministerial Advisory Committee (PHMAC) developed this system so consumers would have access to products which are both affordable and provide value for money across all life-stages.

“Other reforms such as reducing inflated medical device benefits to be more consistent with real market value have already had a positive impact on premiums and delivered benefits to consumers. Last year’s average premium increase of 3.95% was the lowest in 17 years, but necessary to ensure funds remain financially viable, meet statutory prudential requirements and most importantly, continue to provide members with access to quality health care.

“The introduction of a Lifetime Health Cover discount will help put private health cover in the reach of younger people. People aged under 30 are particularly conscious of the need for preventative dental care, treatment of sports injuries and cover for mental health problems treated in hospital. These are all things which are difficult to access without private health insurance.

“PHA supports the introduction of standard clinical terminology so consumers can compare ‘apples with apples’ and better navigate the system at the point of purchasing a health insurance policy. Upgrading the Private Health Insurance Ombudsman’s website www.privatehealth.gov.au will provide consumers with an independent source of advice about choosing an appropriate policy. The most important thing is consumers know what they are buying, and that their policy of choice is not only affordable, but meets their health and life stage needs. This is the core objective of this PHI reform package.

“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 cover. The Senate’s passing of the PHI Reform Bill will put the consumer at the centre of the private health system, by making it easier for them to choose an affordable product that provides value for money,” said Dr David.

Media contact: Jen Eddy 0439 240 755

Private Healthcare Australia CEO Dr Rachel David said the AMA’s scaremongering about health funds accessing My Health Record data, demonstrates an astonishing level of ignorance about how private health insurance operates.

Private health insurance is based on the principle of ‘community rating’, which means consumers pay the same premium for the same policy regardless of their current or potential health status.

It is illegal for health funds to exclude a member, or alter their premium based on their health status or potential health status. Private health insurance differs from general or life insurance in this respect, as these are risk-rated.

Like Medicare, health funds are prevented from discriminating between people on the basis of their health or for any other reason. Therefore health insurance policies depend on the depth and breadth of cover sought but not the health background or age of the policy holder.

Someone who has battled cancer two or three times will pay the same premium for top hospital cover as someone who is healthy. In Australia we call that a fair go and our private health insurance system is proof it still exists.

This is in contrast to other types of insurance like car insurance, which are risk rated. This means the risks associated with insuring your car, such as your driving record, your age, your gender, where you live, what type of car you have, all impact the cost to you or your car insurance.

Health funds are only interested in accessing data at the secondary use level. This is population level data that has been de-identified, and is used for health systems research, that being how to improve the quality, safety and cost-effectiveness of health services and better co-ordinate patient care. This level of access has been granted to all other health system stakeholders, and health funds, most of which are also health service providers should also have access to it as well.

Health funds have repeatedly confirmed that they are not interested in any form of data from the My Health Record whereby individuals or members could be identified.

Unfortunately there is a low level of understanding about our community rated system of PHI. A recent Healthshare survey found that 70 % of GPs surveyed were either unsure or believed that if a patient discussed their medical history with their health fund, it could impact their premium. This is completely incorrect.

Community rating is a crucial part of our health system, both for Medicare and private health. It ensures that private cover is equally accessible to anyone who needs it and enables health funds to help take the burden off the public healthcare system.

Media contact: Jen Eddy 0439 240 755

Private Healthcare Australia CEO Dr Rachel David said a media report in News Ltd publications about a leaked Deloitte document was completely wrong and an example of ‘fake news’.

“For the record, the so called leaked modelling was rejected months ago by health funds, the Department of Health and the Private Health Ministerial Advisory Council.

“The Opposition would do well to check a few facts before regurgitating fake news about Australian health funds.

“The report was provided to PHMAC in April this year, and indicated a model where downward pressure on premiums could be obtained via a reduction in benefits. PHA and its member funds have been clear throughout this process, there must be premium neutrality, and no reduction in services provided as a result of the reform measures.

“The Deloitte modelling was peer reviewed by health fund actuaries in a formal meeting in Canberra and rejected. It was only ever an input into work-in-progress and is not reflected in the final reforms, the intent of which is to assist consumers in choosing appropriate health insurance.

“Health funds have participated in this process since 2016 as a response to concerns raised by the then Health Minister Sussan Ley, and the head of her PHI Review team, Graeme Samuel AC, that consumers find the process of choosing and using their health insurance too confusing and complex.

“This meant the current PHI reforms became government policy. PHA felt there was some legitimacy to the concerns and thus committed to work with other private health stakeholders, including making a considerable financial investment, towards a better system.

“At no point has reduction of services and benefits to consumers been on the agenda – the APRA data shows these continue to grow. Medical groups, including the AMA and RACS have been involved in the process the whole time, and signed off on the outcomes.

“Every health stakeholder had to make compromises to help consumers during PHMAC and none more than health funds,” said Dr David.

Media contact: Jen Eddy 0439 240 755

Private Healthcare Australia CEO Dr Rachel David says the Morrison Government’s Productivity Commission Inquiry into mental health should investigate options to increase funding and support for models of care in the community.

Private health insurance is a major funder of mental health care in Australia. Health funds pay for 76% of same day mental health treatments and 56% of all mental health care type admissions. There has been dramatic growth in mental health day admissions over the last decade and the percentage of young Australians presenting to hospital with mental health conditions is increasing by 10% per year.

“Health funds are committed to funding a better mental health care environment as this becomes an increasingly important issue in our society, with social and economic consequences for all Australians. One in five Australians experience a mental health condition in a given year, and almost one in two will experience a mental health condition at some point in their lifetime. Psychiatry is now the top claim for major health funds for women in their 20’s and the second most claimed item for men,” said Dr David.

“As part of the PHI Review health funds successfully proposed the introduction of a mental health safety net and this came into effect on 1 April this year. This allows people who are admitted unexpectedly to hospital for a serious mental health condition to upgrade their cover immediately without serving the usual waiting periods for pre-existing conditions.

“This is important because mental health services are highly valued, particularly by younger people and some of the basic level hospital products provide limited cover for mental health services. The waiting period exemption will make it easier for patients to access care when they most need it, without facing substantial out-of-pocket costs.

“Health funds will support the Productivity Commission Inquiry and encourages a focus on investigating and addressing the lack of funding for services to be provided in the community. There is currently an over emphasis on hospital based care. Health funds are currently prevented by legislation for paying for care outside the hospital gate but we would welcome change and the opportunity to participate in the development of models of care within the community, Dr David said.

Media contact: Jen Eddy 0439 240 755

Private Healthcare Australia Chief Executive Dr Rachel David said new private health insurance rules announced by the Government today will make it easier for consumers to choose and use their health cover.

“Australian consumers have asked for a PHI system which is easier to understand and more transparent and the Gold, Silver, Bronze, Basic classification system will deliver that,” said Dr David.

“This reform is a key feature of the PHI package of reforms and will classify existing policies into easy to understand tiers. The system is designed to reflect as much as is possible the spread of products already in the market, however it will eliminate features of the system that consumers have found confusing, improve transparency and make it simpler for consumers to use their PHI.

“The Private Health Ministerial Advisory Committee (PHMAC) developed this system so consumers would have access to products which are both affordable and provide value for money across all life-stages.

“Despite media speculation, this reform will be premium neutral on average, as was always the intention. 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 cover.

“Health funds have worked with the government and private health stakeholders for more than two years to deliver PHI reforms. In doing so we have gone through health fund products line by line to ensure we are keeping the balance of affordability and value for money for consumers choosing private health”.

Dr David said multiple models were considered and evaluated by PHMAC during the PHI reform process and the final rules as agreed by Government, private health and consumer stakeholders will be implemented by health funds.

Health funds can now start implementing the new product tiers. New policies will be categorised under this system from 1 April 2019, and all products will comply by 1 April 2020.

PHA’s Annual High Claims 2018 Report demonstrates the value of having private health insurance, particularly for younger Australians, but it also highlights the impact medical device costs and long hospital admissions for mental health problems are having on claims (report attached).

The report reflects the latest APRA 2017/18 data that shows prostheses (medical device) benefits paid by private health insurers have increased considerably over the past five years across major disease groups such as cardiac and musculoskeletal procedures (which covers hip and knee, foot and ankle, shoulder and elbow, hand and spine).

Health funds paid more than $6.82 billion in benefits for individual claims (for which the benefit payment exceeded $10,000) during 2017, an increase of 6.6% compared to 2016. Nearly half of all payments for hospital treatment by health funds (46%) are for claims where the benefit payment for the episode of care was more than $10,000.

PHA’s Annual High Claims report analyses the nature and magnitude of high claims paid by health funds over the 12 months to December 2017. The report is collated using data from 37 health funds representing 100% of the private health insurance industry.

In total, health funds paid out on behalf of members 332,331 claims where the benefit payment for the episode of care was more than $10,000, the highest benefit paid being $699,582 for the treatment of a patient with viral encephalitis.

PHA Chief Executive Dr Rachel David said the report highlights the value and contribution of PHI to the lives of individuals, as well as Australia’s broader healthcare system.

“The report clearly shows private hospitals are now dealing with very complex cases like the public hospital system, and these are funded by private health insurance, taking the pressure off public hospitals.

“The report emphasises the importance of health fund membership for young Australians, with more than 17,000 high claims (benefits exceeding $10,000) paid for members under the age of 30 during 2017. This was an increase on the previous year of 1,000 claims (+6.2%).

“Many of these episodes involved hospital stays of more than 100 days for young Australians suffering from mental health issues, cancer and other conditions.

“More than 13.5 million Australians hold PHI and over half of those have disposable incomes under $50,000 per annum. More than 80% believe that they get value for money from their PHI. One of the main reasons for this is peace of mind as well as choice of doctor, choice of hospital, and timing of medical treatment,” said Dr David.

Health funds paid a record $20.5 billion in benefits on behalf of their members in 2017-18, an increase of 3.4% on the previous year, according to the latest APRA Report.

Private Healthcare CEO Dr Rachel David said APRA’s Operations of Private Health Insurance Annual Report 2017-18, confirmed that health funds are delivering real value to more than 13.5 million members.

“Health funds are paying more for healthcare services and continue to consistently pay 86 cents in the premium dollar back to members to fund their healthcare. Health funds pay the highest percentage back to customers of all insurance types – it has been above 85% for 16 years,” said Dr David.

“Also, the proportion of in-hospital treatment medical services with no gap increased to 88.1% in 2017/18 compared to 86.6% in 2016/17”.

Benefits paid increased by more than 3% in both hospital and general treatment cover:

• Hospital treatment benefits: $15.191 billion (74% of total fund benefits, 3.0% increase compared to previous year)
• General treatment and ambulance: $5.088 billion (25% of total fund benefits, 4.5% increase compared to previous year)
• State levies: $227.39 million (1% of total fund benefits, 3.3% increase compared to previous year)

“The APRA report shows that health funds continue to operate efficiently with a focus on delivering benefits to members, Dr David said.

“Net profit margins for the PHI industry continue to remain low at 5.3%, a modest return when compared with other forms of insurance. Health fund profit margins have remained stable over the last decade running between 4.5 and 6%, as have Management Expense Ratios at 8.9%.

“APRA’s report dispels the myth that health funds are hiding a pot of gold. Health funds, whether run as a for-profit or a not-for-profit, must operate as successful businesses to be able to keep premiums affordable for their members and to ensure members’ care can be funded if and when it is needed.

“PHI is a critical part of Australia’s health system. It benefits all Australians by keeping pressure off the public hospital system.”

Benefits paid by health funds on behalf of their members increased by 3.62% to reach a record $20.4 billion in the year to September 2018.

Private Healthcare Australia Chief Executive Dr Rachel David said the latest data released by APRA demonstrated the ongoing commitment of Australian health funds to addressing the value of private health insurance for consumers.

In the September quarter, total benefits paid increased by 3.62% while premium revenue increased by 3.31%. Net margin has decreased from 5.52% to 5.18% and net profit for the year to September 2018 was $1.41 billion, down 1.4% compared to same time in the previous year.

Dr David said health funds were 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 63c for general insurance.

“More than 21,000 Australians took out PHI during the September 2018 quarter (0.2% increase), increasing PHI participation from 13.547 million to 13.568 million Australians. This was reflected in total PHI policies increasing by 11,511 (0.2% increase) from 6.63 million policies to 6.64 million policies.

“The proportion of the population with PHI cover was down slightly (-0.12%) to 54.1%. However, with more than half of the Australian population committed to holding on to their health cover, the PHI industry, Government and healthcare stakeholders must continue to work together to address cost pressures.

“This year’s average premium increase (3.95%) was the lowest in 17 years. Health funds members and consumers seeking to take out health cover 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 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. Private health insurance benefits all Australians by reducing pressure on the public hospital system.”

Media contact: Jen Eddy 0439240755

Premiums have increased because more claims are being paid, not because of retained capital or excess profits

Private Healthcare Australia’s Chief Executive Dr Rachel David said APRA’s review of capital standards for private health insurers was designed to ensure health funds retained sufficient capital to protect their members.

APRA has emphasised that capital levels in the industry are appropriate and do not need to be reduced and that “any changes to the capital framework are unlikely to materially affect premiums; claims costs, rather than capital levels, have been the primary driver of health insurance premium rises over recent years.” (Geoff Summerhayes, APRA).

Dr David said put simply, this means premiums have increased because health funds are paying for more healthcare. This supports the private health insurance industry’s position and dispels the myth that health funds are “continuing to rake in bumper profits.” (Catherine King 15/11/18)

“Health funds are required by law to retain sufficient capital to ensure they can pay for members’ healthcare if and when they need it. According to the latest APRA data health funds are paying out record benefits ($20.4b in the year to Sept 2018) on behalf of 13.5 million members and have consistently retuned 86c in the premium dollar back to members in healthcare payments.

“In the September quarter, total benefits paid increased by 3.62% while premium revenue increased by 3.31%. Net margin has decreased from 5.52% to 5.18% and net profit for the year to September 2018 was $1.41 billion, down 1.4% compared to same time in the previous year.

“More than half of the Australian population has private health insurance and the industry is committed to keeping premiums affordable and maintaining the value of health cover for its members.

“APRA’s review aims to ensure health funds will be able to continue to fund the healthcare needs of their members into the future. Keeping private health insurance sustainable is crucial for Australia’s mixed public private healthcare system as PHI reduces pressure on public hospitals,” said Dr David.

Media contact: Jen Eddy 0439240755

The Australian Commission on Safety and Quality in Health Care’s Atlas of Healthcare Variation is an important reminder to all healthcare practitioners that appropriate care and patient safety should always be the priority, according to Private Healthcare Australia Chief Executive Dr Rachel David.

Dr David said that while Australian consumers generally had good access to quality health care, it was concerning that the third Atlas highlighted significant variations in some areas of health according to where people lived, particularly in obstetrics where in some locations one in five planned births were before 37 weeks.

“The high incidence of early planned caesarean sections that are not medically necessary pose risks to mother and baby. The Atlas also identified that young Australians are at risk of serious long-term adverse effects as a result of overuse of antibiotics.

“The Atlas found overuse of gastroscopy and colonoscopy with variations of up to seven-fold between local areas in Australia, the rate of neck ultrasound varies up to six-fold, and overuse of anti-psychotic medication being prescribed by GPs to people aged over 65 years is a major concern.

“While patient safety should always be the priority, eliminating unnecessary care would have a significant impact on healthcare costs in Australia and if improving affordability is a by-product of focusing on quality and safety, then it is a win-win for all Australians.

“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 or unnecessary treatment. The more low-value tests and treatments that are eliminated, the easier it will be to keep downward pressure on premiums and invest members’ funds in procedures that are necessary.

“The ACQSHC Atlas is a valuable document and will make an important contribution to improving quality and safety in health care for all Australians,” said Dr David.

Private Healthcare Australia (PHA) says the Opposition’s proposed Productivity Commission (PC) Inquiry into the private health insurance industry must consider the impact of rising input costs in the private healthcare sector.

“PHA fully supports a PC inquiry into private health. The industry is absolutely committed to Medicare, our universal health system and to maintaining the balance between our public and private sectors. 13.5 million Australians have private health insurance, and most greatly value the timely access to planned surgery, mental health and dental care it guarantees. Our research shows premium affordability and uncertain medical out-of-pocket costs are of concern to health fund members, half of whom have taxable incomes under $50,000 per annum. Many of these are full pensioners and superannuants who are making considerable sacrifices to maintain their health insurance,” said PHA CEO Dr David.

“The reason premiums increase is because health funds are paying for more health care. This is an issue for the whole health system as the baby-boomer population reaches the age where more surgery and dental care is required, and the cost of technology continues to increase. The only way to put downward pressure on premiums as utilisation goes up, is to address wasteful input costs – fraud and over-servicing, gaming of the system by State governments pushing private patients through public hospitals, and inflated prices for medical devices.

“PHA has released a 7-point plan to guarantee cost-effectiveness of medical devices, so all Australian’s can get access to high quality, safe and affordable medical implants.

“The private sector plays a crucial key role in Australia’s health system, performing almost two-thirds of non-emergency surgery in Australia. 60% of all surgical procedures carried out in Australia are performed in private hospitals each year. Private Health Insurance (PHI) pays for 70% of all same day mental health treatment and 51% of all mental health admissions, 60% of all joint replacements and 62% of all chemotherapy treatments in Australian hospitals.

“Last year alone, 42 million dental services were subsidised by health funds, compared with 1.7 million service services provided by Australian governments.

“The latest APRA report shows that net profit margins for the PHI industry continue to remain steady at 5.3%, a modest return when compared with other forms of insurance. Health fund profit margins have remained stable over the last decade running between 4.5 and 6%, and Management Expense Ratios have greatly declined over this time from 13% to 8.9%.

“Health funds are committed to keeping premiums as low as possible 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. It is important to acknowledge however, the funds only have some of the levers required to manage costs. To continue to deliver high quality and affordable private health care the industry will require the co-operation of all stakeholders, including Australian governments,” said Dr David.

Media contact: Jen Eddy 0439240755; Celia Moore 0432344069

The Government’s Private Health Insurance Reforms have had a positive impact on the affordability of Private Health Insurance (PHI), with the announcement of the lowest average premium increase in 18 years for Australian consumers.

The average premium increase of 3.25% comes into effect on 1 April 2019 and reflects the fact that health funds are paying for more healthcare. Our aging population, rising healthcare costs including advancements in medical technology, all contribute to health inflation which at 4.1% per annum, is significantly higher than CPI.

Private Healthcare Australia Chief Executive Dr Rachel David said increasing healthcare costs and increasing utilisation of healthcare services, all contributed to health fund and consumer concerns about affordability and the subsequent PHI reform process.

“The reforms were developed over a two-year period by Government, health funds, private hospitals, medical specialists and allied health groups. Passed by the Parliament in September, the package of reforms is already starting to deliver results with this year’s premium increase lower than it would otherwise be,” said Dr David.

“No-one likes a premium increase, but it is necessary to ensure health funds remain financially viable, meet statutory prudential requirements and most importantly, continue to be in a position to provide members with access to quality healthcare.

 “Affordability is an issue across the health system. Public hospitals were guaranteed an annual 6.5% capped funding increase until 2025 through the COAG process, in contrast to the average increase for PHI of 3.25%.”

It is a fact that health funds are paying for more healthcare for their members.

• In the year to September 2018 benefits paid by health funds on behalf of their members increased by 3.62% to reach a record $20.43 billion. Health funds are consistently paying 86c in the premium dollar back to members as benefits. This compares with 63c for general insurance.
• In the September quarter, total benefits paid increased by 3.62% while premium revenue increased by 3.31%. Net margin has decreased from 5.52% to 5.18% and net profit for the year to September 2018 was $1.41 billion, down 1.4% compared to same period last year.

Increasingly younger people are turning to health funds to ensure they are covered for mental health treatment. PHI pays for 67% of all same day mental health treatment and 51% of all mental health care admissions. In the few months since July this year, 1000 people were unexpectedly admitted to a private hospital needing urgent mental health treatment and received immediate access to care under the private health mental health safety net.

“This year’s premium increase demonstrates that health funds are committed to keeping PHI affordable for 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.

“The private sector plays a crucial 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. PHI pays for 57% of all joint replacements and 57% of all chemotherapy treatments in Australian hospitals. 85% of retinal procedures take place in the private sector. 

“In addition, health funds last year paid out over $2.7 billion for dental care, more than the Federal Government. Last year alone, health funds subsidised over 41.7 million dental services. 

“Health funds 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.

Private health funds are forecast to inject an additional $500 million into Australia’s health care system in 2018-19, bringing total expenditure on private health treatments to more than $20.9 billion.

ENDS

Media enquiries

Celia Moore – 0432 344 069

View a PDF version here

Private Healthcare Australia (PHA) has proposed a number of key reforms to address the rising costs of healthcare and stem the movement of members to an already overburdened public health system. With healthcare costs rising by five percent annually, it is more important than ever for government to adopt the reforms to maintain the balance between the private and public healthcare sectors.

PHA Chief Executive Dr Rachel David said the reforms could reduce spending in the short term and halve healthcare inflation to just 2 to 3 percent p.a. over the long term, while maintaining high quality care and access. Dr David said these reforms would not only make private health more affordable for members but could deliver savings for areas of the Medicare system as well.

One of the key measures in PHA’s 2019-20 Budget Submission is the restoration of the PHI rebate to 30% for low and middle-income earners, or at a minimum, arrest the decline to maintain it at current levels.

“Financial incentives including the means-tested rebate are a proven way to promote participation and keep private cover more affordable for all Australians. PHA research has clearly demonstrated that the private health insurance rebate is a highly efficient way of funding non-emergency surgery and in-hospital mental health care,” [1] said Dr David.

“As of June 2018, 54% of the Australian population have a private health insurance policy, however without further reforms to address rising healthcare costs participation could drop to 30% by 2030-2035. This will result in longer hospital waiting times, and a shortage of beds for the people who need them most.”

Dr David said the success of the Coalition Government’s private health insurance reforms introduced in 2018 meant this year’s premium increase of 3.25% was much lower than it would otherwise have been and the lowest recorded for almost two decades.

“It is time the healthcare industry repeated the successful collaborative effort, started by the Coalition government and delivered by the 2018 PHI reforms. The reforms were two years in the making and developed by stakeholders from across the health system including health funds, medical professionals, hospitals and consumers groups. These reforms are proof that when industry works together, we can achieve more affordable outcomes for the 13.5 million Australians that choose to have private health cover.”

Another key issue the entire health industry must address to make healthcare more affordable is ensuring patients are provided with the “right care”, that is, providing services when they are needed to an appropriate standard – right patient, right setting, right time. To achieve this, there are simple measures that should be implemented:

1. Removal of items from the Medicare Benefits Schedule (MBS) that experts agree are low value, wasteful or harmful, or the tightening of descriptors to evidence-based care;
2. Permit health funds to provide funding for specific outpatient services to help consumers avoid accumulating co-payments;
3. Reduce hospitalisations with more holistic patient-centric management of chronic and complex disease, including co-funding of prevention, home care and community-based options;
4. Continue to work towards fair prices for medical devices in Australia through a national procurement strategy, which includes international reference pricing and price disclosure, and health technology assessment of new products to ensure we get the best quality and value for money for Australians.

Dr David said the only way to put downward pressure on premiums as utilisation goes up was to address wasteful input costs.

“Wasteful costs in the health system are not unique to the private sector, and they have multiple causes. Often this is down to health system design and regulations, which are not fit-for-purpose. This is why payors and providers need to work together towards improved outcomes for consumers.”

PHA is also proposing a more affordable and accessible dental health system. Through contracting with dentists and vertically integrating with dental practices, private health funds have been able to deliver cost relief to consumers through reduced out-of-pocket costs.

“Extending the efficiencies of private funders of dental care to the public sector could deliver further savings to the government. This can achieved by contracting out Commonwealth dental health program funding and enabling health funds to tender as service providers.” says Dr David.

Health funds are playing an increasingly important role in ensuring Australians have access to high quality dental care. One-in-two Australians claim for dental services through a health fund. Health funds pay out over $2.6 billion per annum in dental benefits, which is more than Federal Government dental programs.

“None of the proposed reforms are radical, they are sensible and necessary to ensure our health system continues to deliver high quality, accessible and affordable care for all Australians. Health funds are committed to delivering value for money by funding evidence-based care, at an affordable price,” said Dr David.

[1] Evaluate, The Relative Efficiency of the Private Health Insurance Rebate v Direct Public Health Expenditure, 2017

PHA’s complete Budget Submission 2019-20 can be accessed here.

Media Contact:  Jen Eddy   0439 240 755

Private Healthcare Australia (PHA) Chief Executive Dr Rachel David said the Opposition’s proposal to establish an expert commission to oversee long term health reform was a positive step towards ensuring the sustainability of Australia’s healthcare system.

“An Australian Health Care Reform Commission should be truly independent, well resourced, capable of delivering results and prepared to tackle the hard reforms,” Dr David said.

“Australia still has one of the best health systems in the world but increasing healthcare costs coupled with the pressures associated with an ageing population, and an increasing incidence of chronic disease, means that inevitably some hard decisions will have to made in the future to ensure all Australians can continue to have access to the level of care we currently enjoy.

“With healthcare costs rising by five percent annually, it is more important than ever for policy makers to get serious about further reform and commit to maintain the balance between the private and public healthcare sectors.

“PHA also welcomes the announcement today that one of the Commission’s first priorities will be to scrutinise health consumers’ access to specialists in hospital outpatient clinics. Long waits for public hospital outpatient appointments, and increasing out-of-pocket costs to see a private specialist in the community, are issues of major concern for consumers.

“There is no question that further reforms are needed to keep Australia’s healthcare system sustainable, but success will require sensible stakeholder engagement and genuine commitment across the political divide,” Dr David said.

Media Contact:  Jen Eddy,  0439 240 755

Private Healthcare Australia Chief Executive Dr Rachel David has warned that further collaborative reforms to address rising healthcare costs are urgently needed or PHI participation could fall to 30% by 2030-2035.

The latest PHI statistics released by the Australian Prudential Regulatory Authority (APRA) support the industry’s claim that healthcare stakeholders must work collaboratively to reduce costs and reduce waste to maintain the balance between the public and the private systems.  Promoting the benefits of the system like better access to mental health and dental services to younger people is also required.

“APRA’s December quarterly data shows a decrease in hospital treatment membership of 12,370 people compared with the September 2018 quarter, with the largest movement among people aged between 25-29. At the same time, there was an increase of 3,471 people in general treatment (extras) membership compared with the September quarter. This suggests there is a pent-up demand for PHI among young people who are choosing extras cover as an affordable alternative,” said Dr David.

“The introduction of Lifetime Health Cover discounts for people aged 18-29 which comes into effect on 1 April this year will help put health cover in reach of younger people, however further reforms are needed to improve the affordability of PHI for young Australians and increase their access to private hospital services. As members drop their hospital cover, the balance between the public and private sectors will alter with wait times for public hospitals getting longer, resulting in a shortage of beds for the people who need them most.

“For example, a recent analysis by HBF has found that West Australians are waiting on average eight months longer to see a specialist for surgery in the public hospital system compared with those who go private.  The report shows that the total wait time (from the date of referral to see a specialist) for private patients is two to three weeks while public patients wait on average almost nine months.

“PHA research consistently shows that more than 80% of members value their PHI and want to keep it but affordability is their main concern. The only reason premiums increase is because input costs are rising, and health funds are paying for more healthcare as our population ages.

“Health funds are committed to delivering value for their members but there is no pot of gold. The APRA data also shows an increase in benefits paid during the December quarter for both hospital cover (3.4% or $3.96b compared to the September quarter) and general treatment cover (9.5% or $1.35b with dental comprising more than 50% of expenditure). Further, for the year ending December 2018 net profit after tax for health funds was down by 16%,” Dr David said.

PHA has proposed a number of key reforms to both the Government and the Opposition that will address the rising costs of healthcare and stem the movement of members to an already overburdened public health system.

Healthcare costs are rising by five percent annually, and these reforms could reduce spending in the short term and halve healthcare inflation to just 2 to 3 percent pa over the long term. Not only will these reforms make private health more affordable for members, but they could also deliver savings for areas of the Medicare system as well.

Key reforms include:

• the restoration of the PHI rebate to 30% for low and middle-income earners, or at a minimum, arrest the decline to maintain it at current levels;
• ensuring patients are provided with the “right care”, that is, providing services when they are needed to an appropriate standard – right patient, right setting, right time;
• Continued reform of the overpriced medical device sector;
• a more affordable and accessible dental health system through contracting with dentists and vertically integrating with dental practices, private health funds have been able to deliver cost relief to consumers through reduced out-of-pocket costs.

“The healthcare sector has already demonstrated that by working together we can influence affordability through sensible policy change. The Government’s PHI reforms introduced in 2018 meant this year’s premium increase of 3.25% was much lower than it would otherwise have been and the lowest recorded for almost two decades.

“Stakeholders from across the health system including health funds, medical professionals, hospitals and consumers groups need to repeat this successful collaborative effort,” Dr David said.

Media Contact: Jen Eddy,  0439 240 755

Private Healthcare Australia (PHA) Chief Executive Dr Rachel David says a Federal Government plan to provide consumers more information about medical specialist fees and charges is a welcome step, and further urgent action must be taken against medical specialists who charge egregious fees or fail to inform consumers of likely costs in advance.

A major joint research project on out- of-pocket costs, by the Department of Health and PHA, has revealed a complete picture of out-of-pocket costs charged for medical specialist care for the first time.

IPSOS surveyed over 6000 privately insured Australians who had been in hospital in the last two years. Four out of 10 people had been charged a gap (average $1000) and one third of them had not been informed in advance.

“The research confirms medical out-of-pocket costs are a major factor in consumers dropping their private health insurance, but their discontent with the system greatly diminishes when consumers are fully informed of costs in advance”, Dr David said.   “This includes anaesthetist and assistant fees which are a very significant cause of anger when they are not disclosed.”

“If consumers are in control of their circumstances, that is, they can choose their specialist, and are fully informed about gap charges and any other additional fees, they are more likely to be satisfied with their treatment, less likely to drop their private health cover and less likely to become dependent on the already over stretched public hospital system.

“Gap fees are driving dissatisfaction with health funds who have limited control over what a medical specialist charges. While the majority of medical specialists charge acceptable fees and treat their patients with respect in terms of providing advice about costs in advance, there is at minority that continue to generate discontent.

“The research found that the average size of the gap by specialist varies considerably. While the largest proportion of gaps falls in the range of less than $500, one in five (19%) are greater than $2000 and one in fifty (2%) exceed $10,000. The largest gap recorded was $40,000.

“The fact 2% of private patients are faced with fees of more than $10,000 without a good reason is enough to suggest serious action needs to be taken to stop this practice.  It is a known fact there is no correlation between cost and quality when it comes to medical specialist care.

“No-one, including consumers, expects all services will be provided without a gap, but patients are being blindsided by charges they didn’t expect for anaesthetists and assistant surgeons.  Furthermore, 8% of those surveyed had been charged an upfront booking or administration fee that can’t be claimed from health funds or Medicare. This practice should be banned.

“The future of private health depends on doctors, health funds and hospitals working together to improve the consumer experience.  This includes empowering people to choose their specialist based on their capabilities and price, and receiving a comprehensive quote in advance of treatment.  Our research clearly shows this is what patients expect.”

Media Contact: Jen Eddy, 0439 240 755

Private Healthcare Australia (PHA) has warned a universal dental scheme will cost taxpayers more than $10 billion a year, and will grow rapidly.  Currently we spend $10.2 billion in Australia on essential dental services and there is still unmet need.

PHA is proposing a more affordable and accessible dental health system by recommending Federal Governments tender out Commonwealth dental health programs for low income earners, working together with the private sector to deliver affordable dental care.

“Health funds have a proven track record in delivering affordable and efficient dental care to Australians. Allowing health funds to tender as service providers would be much more cost effective, as they already have the infrastructure to deliver low cost oral healthcare in place,” said PHA CEO Dr Rachel David.

Health funds are the major funder of dental care in this country. Health funds pay out over $2.7 billion per annum in dental benefits, which is more than Federal Government dental programs. One-in-two Australians claim for dental services through a health fund.  A ‘Denticare’ scheme that threatens this contribution yet promises affordable dental care is not feasible.

PHA warns the only way to fund a universal dental scheme would be to introduce additional taxation and require individuals to fork out substantial co-payments. This would limit eligibility or cap the scope or fees of services available under the scheme.

“Traditionally, dental care has been a cottage industry, with large variability in costs for the same service. Approximately 85 percent of dentists’ work in the private sector in their main practice. Unlike medical treatments that are covered by Medicare, which have prescribed fees, dental care has no standard fees associated with the services provided by dental professionals. This can lead to a patient receiving different treatment plans from different dental professionals.

“PHA has submitted its alternate proposal to the Government and Opposition to improve the efficiency of public dental care programs, reduce costs and improve access to high quality dental care for all Australians. Extending the efficiencies of private funders of dental care to the public sector could deliver further savings to the government,” said Dr David.

Dr David said the lack of access to affordable dental care remains a major problem in Australia’s health system and that reform of the dental health sector should be the next major project for policy makers.

“Decision makers need to focus on access, quality, affordability and tackling waste in the dental industry.  Australia’s health funds have the experience to deliver this.

“PHA is not proposing a new or radical concept. Increasingly, health funds are contracting with dentists and vertically integrating with dental practices, thereby consolidating and creating economies of scale. Health funds have also been able to negotiate harder for dental related equipment and products.

“By contracting dentists, health funds have been able to reduce uncertainty about out-of-pocket costs, and at the same time been able to provide preventive dental services, often with no gaps.

“In addition, the Australian Competition and Consumer Commission has noted, in its annual reports on PHI, that preferred provider arrangements can deliver benefits to health fund members, most commonly in the form of a greater rebate, when they choose to have treatment at one of their health fund’s preferred providers.

“When it comes to dental care, the evidence is clear.  Preferred provider arrangements have cut the out-of-pocket costs and increased access to dental services, which has resulted in public benefits.

“Private Healthcare Australia is proposing that these efficiencies be extended to the public system, that private funders of dental care be able to compete to provide public programs. This is a sensible policy adjustment with a proven track record of success,” said Dr David.

Notes to the Editor: Facts

• One in two Australians claim for dental services through a health fund.
• 52% of extras claims are for dental care.
• Health funds pay for more than 41.5 million dental services annually, which is $2.6 billion per annum in dental benefits.
• Health funds pay more for dental services ($2.6 billion) than Federal Government dental programs.
• 90 per cent of dental services provided to low and middle income earners get some level of reimbursement from a health fund and 60 per cent of dental treatments/services in hospitals are also funded by health funds.
• Government expenditure on dental services (by Federal and State Governments) represents only a small proportion of the total: $2.4 billion including the PHI rebate for dental services (which is $701 million).

Media Contact: Jen Eddy,  0439 240 755

Private Healthcare Australia Chief Executive Dr Rachel David says the Opposition’s proposal to establish a national standard for informed financial consent is a positive step towards reducing out-of-pocket costs, and allowing consumers to take greater control of their specialist care.

“Health funds have long been advocating for more transparency on behalf of their members who incur out-of-pocket costs when they see a medical specialist as an outpatient. Private health insurance cannot cover these expenses under Australian law if a Medicare benefit is also paid. A gap can also occur when providers charge unethical fees, such as booking fees,” Dr David said.

The Opposition’s $10 million plan to establish a ministerial working group to develop the national standard to ensure patients are fully informed about costs ahead of their procedures will give consumers certainty when they needed it most.

“Gap fees are driving dissatisfaction with health funds who have limited control over what a medical specialist charges. While the majority of medical specialists charge acceptable fees and treat their patients with respect by providing advice about costs in advance, it is the small minority generating discontent.

“Research shows that when consumers are in control of their circumstances, that is, they can choose their specialist, and are fully informed about gap charges and any other additional fees, they are more satisfied with their care, and less likely to drop their private health insurance and become dependent on the already over stretched public hospital system.

“It is a known fact that there is no correlation between cost and quality when it comes to medical treatment.”

Dr David said consumers should expect an upfront quote for hospital care which includes any extras for the anaesthetist or surgical assistant.

• The first step is to talk to your GP about getting a referral to a specialist that doesn’t charge a gap.
• Talk to your health fund about what you’re covered for and no-gap providers in your area.
• Ensure you get a quote from your specialist up front. If there are unexplained charges on your bill such as booking fees, don’t pay it until you have received a valid explanation.

Media Contact: Jen Eddy, 0439 240 755