How to cut health premiums

Private hospitals believe curbing claims on private health insurance for treatment in public hospitals is the key to reducing premiums.

According to the Australian Private Hospitals Association’s (APHA) Federal Budget submission, if this practice stopped it would reduce private health insurance premiums by six per cent.

APHA chief executive Michael Roff said the practice was punishing patients who could not afford private health insurance.

“They suffer with deteriorating health on elective surgery waiting lists as public hospitals push the privately insured ahead of them,” Mr Roff explained. “Add to that, it is also a perversion of Medicare – care based on clinical need, not ability to pay.”

The APHA Federal Budget submission also calls for the federal government to restore the private health insurance rebate to 30 per cent for Australians in the lowest income tier.

“Low-income Australian households face a double whammy of increased premiums and reduced rebates when it comes to private health insurance. Every year, the value of their rebate goes down, while their private health premiums increase,” Mr Roff said.

“For example, in 2019, a high-income earner who did not receive the rebate would have experienced a premium increase of 3.25 per cent. However, low-income earners would have experienced a real premium increase of 3.74 per cent.

“This doesn’t pass the fairness test, nor does it achieve the aim of the rebate – to incentivise Australians to take up private health insurance.”

Mr Roff said the APHA is calling for the restoration of the rebate to 2013–14 levels for low-income earners. That would return the rebate to 30 per cent for under 65-year-olds; 35 per cent for 65–69-year-olds and 40 per cent for those aged 70 and over.

“This will reduce premiums for these households by between 2.02 per cent and 3.67 per cent and cost about $1.4 billion in 2020-21.”

The submission also calls for a default benefit for alternatives to inpatient treatments including day, community-based, home-based programs for rehabilitation, mental health and palliative care.

Not only would this provide patients with more options for accessing care, but also lower the overall cost to the health system.

“Private hospitals have developed a range of innovative programs that would reduce costs and improve outcomes for patients,” Mr Roff said. “These include services like chemotherapy in the home, ambulatory cardiac rehabilitation, rehabilitation in the home and hospital in the home as part of an early discharge service.

“However, the majority of health insurers refuse to financially support such programs provided by hospitals. Instead, they pay for services provided by themselves and a small number of community providers and direct their members to these services.

“Providing default benefits for these services would allow hospitals to expand and integrate services across the continuum of care. This would increase patient choice and reduce the risk of avoidable readmission,” he said.

The APHA Federal Budget submission also calls for:

  • doubling the Medicare Levy Surcharge to properly incentivise high-income Australians to take up private health insurance and relieve pressure on the public system
  • increasing remuneration through the Pharmaceutical Benefits Scheme for hospital-based pharmacy
  • upgrading IT software to relieve the administrative burden of private health insurance reforms
  • increasing clinical placement funding for medical, nursing and allied health professional graduates
  • reducing the cost and complexity of skilled migration arrangements.

Read the full APHA submission.

What do you think of these proposals? Do you believe they would they help reduce insurance premiums?

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Written by Ben Hocking

Ben Hocking is a skilled writer and editor with interests and expertise in politics, government, Centrelink, finance, health, retirement income, superannuation, Wordle and sports.

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