Calls to allow insurers to charge higher premiums for the sick

Paper urges Government to subsidise sicker Australians’ health insurance costs.

sick person

The rising cost of private health insurance and skyrocketing out-of-pocket costs will keep the system in a death spiral until the public and private sectors are better integrated and funds can charge higher premiums to those with chronic health conditions, according to new research.

A paper written by a team of international actuaries urges Australia to look offshore for ways to improve the healthcare network and advocates for rebates to support those in need rather than the current income-based rebates on private health insurance premiums.

It calls on the Government to relax the rules that prevent insurers from charging higher premiums to those with chronic health conditions – with the Government funding the difference. The result, it says, would be cheaper premiums for the young and healthy and a greater uptake of private insurance. And it could be budget-neutral if the Government diverted some of the $6 billion worth of health insurance premium subsidies it gives Australians based on their incomes, The Age reports.

The paper, Private Health and Health Care Financing – Learning from the World, says our healthcare system compares favourably to other developed countries but identifies areas for improvement.

“Australia’s high out-of-pocket expenses and health cost growth suggests a need to review the health system to ensure sustainability for future generations,” the paper says.

The Government spent $185.4 billion on health services and products in 2017-18 or $7485 per person, according to the Australian Institute of Health and Welfare (AIHW). And patients spent $3.9 billion on out-of-pocket hospital expenses in 2017-18, up $560 million or 17 per cent over the previous financial year and quadruple the amount spent a decade earlier.

Specialist out-of-pocket costs increased by almost $200 million in 12 months, and GP out-of-pocket costs rose by $38 million.

The healthcare paper was written by Medibank chief actuary and Monash University Associate Professor Andrew Matthews; Medibank deputy chief actuary Adam Stolz; former Chile Ministry of Health adviser Josefa Henriquez, and University of Newcastle professor of health economics Francesco Paolucci.

It examined health systems in 12 comparable countries and ranked Australia second in overall performance, after the UK and ahead of the Netherlands. It rated our out-of-pocket costs as high, at about 17 per cent of total national healthcare costs.

The paper says Australia’s total share of healthcare costs as a percentage of gross domestic product is not expensive at 10.3 per cent, compared with the US at 17.2 per cent, and Switzerland, Germany and Japan at 12.4 per cent, 11.3 per cent and 10.9 per cent respectively.

But around 16 per cent of Australians reported that they had skipped a medical consultation because of costs, compared with an OECD average closer to 10 per cent (ranging from only 2.6 per cent of Germans to 22.3 per cent of Americans).

Mr Matthews gave the example of a patient who needs mental health treatment but struggles to access services.

“If a good way of dealing with it is to have the private system provide that service, then we have to fund that, whether through private health insurance or some other way, but not from the individual – because it’s too costly,” he told The Age.

“Let’s stop thinking of it as subsidising a private system and think about it as how much are we willing to subsidise a person to get the treatment they need.”

Grattan Institute health economist Stephen Duckett said the proposal was worth considering, but that any changes should not amount to “a disguised further subsidy for private health insurers”.

Are you hanging in with private health insurance? Or have you been forced to dump it?

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    COMMENTS

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    jaycee1
    10th Oct 2019
    11:34am
    ANY study, into health, that puts the UK first has to be suspect.
    The ONLY health section that is actually making any headway in the UK is in Scotland! England is so far out of the ball park you couldn't see it without a magnifying glass.
    inextratime
    10th Oct 2019
    11:48am
    I thought Scotland was part of the British Government and the same healthcare system. Maybe Hadrian's wall has been re erected.
    jaycee1
    11th Oct 2019
    8:46am
    inextratime, Scotland is part of the UK, at the moment, it's healthcare system is NOT part of the British government and never has been.
    The NHS actually started in Scotland before being rolled out in the rest of the UK.
    Robyn
    10th Oct 2019
    11:45am
    This is a terrible idea. Health insurance is an insurance against becoming ill and no-one knows what the future holds in that regard. After many years of paying health insurance without many benefits, my health has deteriorated and I have had to undergo quite a few hospital procedures related to kidney failure. I'm so glad I am covered for private hospital admission.
    'Chelle03
    10th Oct 2019
    11:51am
    Im not certain that charging a higher premium for the chronically ill would work. However, I am certainly an advocate for rebates to those people who have private health insurance and never use it - both hospital and extras!! This would encourage people to keep their insurance and give them an incentive to keep paying the exorbitant premiums we are all suffering.
    older&wiser
    10th Oct 2019
    1:14pm
    Agree - as with everything, there is far too much emphasis on punishment instead of reward. I train dogs, and believe me, they learn FAR more, and FAR more loyal, with rewards, instead of constant punishment.
    Rod63
    10th Oct 2019
    12:02pm
    I think this is vital. People who also eat healthily and exercise regularly should not pay premiums as high as those who don't take good care of themselves.

    People with preventable lifestyle diseases should pay the highest.

    I don't know how this will be checked exactly - probably by getting doctors to do health checks.

    However, as a person who takes good care of himself, I hate having to pay for people who abuse their bodies.
    KSS
    10th Oct 2019
    12:31pm
    Perhaps there could be a no-claims discount like car insurance?
    Rod63
    10th Oct 2019
    1:16pm
    Good idea, KSS.
    jaycee1
    11th Oct 2019
    8:58am
    Rod63, How are you actually going to police that?
    Just because someone does not go to a gym to exercise does NOT mean they are not exercising and eating healthy.

    'People with preventable lifestyle diseases should pay the highest'
    99.9% of diseases are preventable by someones reckoning - measles for instance, is a preventable disease but people still catch it through no fault of their own.
    Eating healthy etc does not mean that you wont get 'preventable diseases' - I have high cholesterol but eat very healthy, exercise almost every day and it is not part of my family history, thus the doctor has no idea why it is high.

    KSS, that is a great idea but unlikely to be carried out by insurers who are only there to make money. :(
    Horace Cope
    10th Oct 2019
    12:08pm
    I checked the date when I read this to see if it was April 1st. Does this mean that we will be allowed to pay for health insurance at a fixed rate until we get sick and need it then they will virtually walk away from their responsibilities under the contract. Is this just a last ditch effort from actuaries who have all been replaced by computers?

    What is needed for people with health insurance is that health insurers go back to the original system where they paid for doctors and hospital visits, no gym memberships, no joggers, no sponsorship of sporting clubs and, most importantly, no payment for those members who use the public hospitals.
    Rod63
    10th Oct 2019
    1:19pm
    "no gym memberships, no joggers, no sponsorship of sporting clubs"

    But it pays off for the insurers, and us, to support these things. If people take care of themselves, they will be less of a drag on the health system.
    Horace Cope
    10th Oct 2019
    2:10pm
    You may be right, Rod63, but these people who claim gym memberships and joggers are more than likely to do that regardless of whether a health insurer compensates them. It's a marketing ploy along with sponsorship.
    Dancer
    10th Oct 2019
    5:39pm
    People who only go the a gym because it is subsidised by their health fund are not serious about keeping healthy. Next these same people will expect the health fund help them pay for fruit and vegetables to maintain a healthy diet - where does it end? I am absolutely against health funds contributing towards gym membership etc. I have gone to a gym for years, I eat well (growing some of my own fruit and vegetables), and buying what I don't grow. I bear the cost of this for my own sake, not because the health fund pays towards it. And yes, I do have hospital cover and have used it a little recently, but I also work hard to maintain my health - for my sake! If you don't take the time to stay healthy, you will have to take the time to be sick!
    MICK
    10th Oct 2019
    12:25pm
    Who is "a team of international actuaries"? Is it an American group paid for by our private health insurance industry?
    The reality is premiums have for well over a decade had regular increases far in excess of the CPI. What the bastards want is to turn our system into a clone of the American system which seas its poorer citizens with ailments which they cannot afford to have treated whilst doctors live the life of Riley.
    Australia does not need this latest attack on its citizens and I have to ask where the government we had to have stands on this issue, or rather how much is it receiving in donations from the industry?
    cupoftea
    10th Oct 2019
    2:33pm
    MICK you are so right I hope that the 16-18yrs who are marching on a different issue today remember tomorrow when they vote
    roy
    10th Oct 2019
    3:37pm
    We should have all voted for Shifty Shorten and we would be living in land flowing with milk and honey.
    Karl Marx
    10th Oct 2019
    5:56pm
    Exactly right roy, spot on mate, better milk & honey than the present cow kick in the bollocks & bee sting on the genitals that this current government are dishing out
    roy
    10th Oct 2019
    7:19pm
    I see the ALP filth have been caught out yet again taking bribes allegedly from a Chinese billionaire, Is Shanghai Sam Dastyari behind that?

    Australia will be part of the people s republic of China mark my words comrades.
    Karl Marx
    10th Oct 2019
    7:37pm
    roy, one minute you are praising the ALP & now your're not, not very creditable are you. Have you ever made any positive contribution to this site as from your post I don't think you have so maybe you are best not to post anything.
    roy
    10th Oct 2019
    8:49pm
    Karl, you do what you want to and I"ll do what i want to do Comrade and if you think i have ever praised the ALP you must have a screw loose, ever heard of tongue in cheek, I don't know what the Russian expression is do you Comrade?

    No comment about the ALP on the news today accused of taking bribes from the Chinese, no, thought not.

    Then there's Jackie Trad, ha ha, didn't know her husband had bought a house on the route of the cost river rail in Brisbane near a new railway station which could well double in a few years even though she signed the forms, ALP filth, makes we want to puke.
    roy
    10th Oct 2019
    8:56pm
    MICK Well said, of course the ALP would never take a donation from anybody untoward, have you seen the news today about the ALP and the Chinese, no, thought not.
    ex PS
    15th Oct 2019
    11:16am
    Got to give it to the Libs, no taking bribes for them, they just bring the Chinese party members into the government.
    KSS
    10th Oct 2019
    12:28pm
    "The healthcare paper was written by Medibank chief actuary and Monash University Associate Professor Andrew Matthews; Medibank deputy chief actuary Adam Stolz; former Chile Ministry of Health adviser Josefa Henriquez, and University of Newcastle professor of health economics Francesco Paolucci."

    Yes well they would argue for higher premiums wouldn't they? Surprise!

    PS. Someone else got my $7485 worth of healthcare because I certainly didn't get even $1.
    MICK
    10th Oct 2019
    1:30pm
    The article referred to an "international group of actuaries" so not sure where the above fit that description.
    Me neither. We never get anything from governments other than high costs brought about by waste and paying those at the top more than they are worth.
    roy
    10th Oct 2019
    8:50pm
    MICK, we need shifty shorten in charge, do you agree?
    Intellego
    10th Oct 2019
    12:41pm
    Slug the chronically ill (who have enough problems already) - great, just great... Only a Right-wing moron would come up with this.
    KSS
    10th Oct 2019
    1:06pm
    You did notice that the committee was NOT a government committee but a group of international actuaries, didn't you?
    MICK
    10th Oct 2019
    1:31pm
    The folk you mention are locals KSS.
    Of course the government we were groomed to vote back in are no surprise. People get what they deserve. Make your vote count. Most do not.
    roy
    10th Oct 2019
    3:38pm
    We want Shifty Shorten yeah yeah yeah.
    Karl Marx
    10th Oct 2019
    6:02pm
    So right roy, spot on mate, would be far better than the current bunch of mongrels that just bleed those that are less fortunate
    roy
    10th Oct 2019
    7:20pm
    ALP filth taking bribes yet again, sheesh.
    Karl Marx
    10th Oct 2019
    7:37pm
    roy, one minute you are praising the ALP & now your're not, not very creditable are you. Have you ever made any positive contribution to this site as from your post I don't think you have so maybe you are best not to post anything.
    floss
    10th Oct 2019
    2:22pm
    Is Australia one of the most costly country in the world to live must be now the Libs are back in power.
    roy
    10th Oct 2019
    3:40pm
    We want Shifty Shorten, yeah.
    Karl Marx
    10th Oct 2019
    6:07pm
    yes yes yes roy, but it's now Mr Albenese as Bill Shorten stood down from the top ALP job but I know what you mean & that's the ALP would be a far far better government for the people than this LNP bunch of mongrels that will make themselves rich along with their current rich mates. Keep the support going mate
    roy
    10th Oct 2019
    7:21pm
    ALP filth taking bribes yet again, sheesh.
    Karl Marx
    10th Oct 2019
    7:36pm
    roy, one minute you are praising the ALP & now your're not, not very creditable are you. Have you ever made any positive contribution to this site as from your post I don't think you have so maybe you are best not to post anything.
    Troubadour
    10th Oct 2019
    3:00pm
    England coming 1st surprises - as we have friends who are having long
    waits for treatments. Recently one with a severe spinal problems and was told she needed physio - had to wait 3 months for an appointment.
    Then turns out she had a tumour. Possibly they do not have health insurance I don''t know, but regardless 3 months is an awful long time with a spinal condition.
    jaycee1
    11th Oct 2019
    9:05am
    Troubadour, at the moment, in the UK you don't need health insurance as they pay for it in their taxes [national insurance]
    Mind you, when they leave the EU and America takes over their health system then it will be like America with health insurance and medical procedures costing the earth.
    thommo
    10th Oct 2019
    4:14pm
    So these bean counters want to charge sick people more for health insurance eh. Well so much for our compassion and humanity. Our govt must ignore this call as it contrary to the spirit of universal health care. If I had a chronic illness and my premiums were raised, I'd opt out of private health insurance which will force the govt to pay for my health care in any event.
    The govt reduces universal health care system at their own peril.
    But I won't be voting for the LNP govt under any circumstances ...ever
    roy
    10th Oct 2019
    7:22pm
    Everything will be OK under the ALP filth, the Chinese will pay for our medicare never fear.
    Karl Marx
    10th Oct 2019
    7:36pm
    roy, one minute you are praising the ALP & now your're not, not very creditable are you. Have you ever made any positive contribution to this site as from your post I don't think you have so maybe you are best not to post anything.
    roy
    11th Oct 2019
    11:07am
    Karl Marx, my wretched computer is always changing the spelling of posts, for instance it keeps changing your name to skid marks, maybe it would be easier if I typed, what do you think?
    Karl Marx
    10th Oct 2019
    6:16pm
    In Thailand you can get private health insurance based on different levels of cover & premiums are also age based but the best thing about it is there is NO GAP. You may pay an excess but that's it until you reach your agreed level of dollar cover & if your treatment exceeded the total cost in 1 year then you pay the over & above charges so if your health insurance cover you for say $100,000 for inpatient for a year & your total bill comes to $110,000 the you'll only pay $10,000.
    Why can't health insurance be based on this type of model so then people with chronic illnesses etc can out to pay high premiums if they so wish
    roy
    10th Oct 2019
    7:23pm
    Go and live there Karl and get away from the ALP filth.
    Karl Marx
    10th Oct 2019
    7:36pm
    roy, one minute you are praising the ALP & now your're not, not very creditable are you. Have you ever made any positive contribution to this site as from your post I don't think you have so maybe you are best not to post anything.
    roy
    10th Oct 2019
    8:53pm
    Karl, if you ever think I've praised the ALP you are so thick, I bet the internet scammers love you,send me your bank details and PIN please.

    What is the Russian for "tongue in cheek" Comrade, my Russian is not as g good as yours comrade.
    MarkAdel
    11th Oct 2019
    12:11am
    Well said Roy.
    What we don’t need is communists and Labor unionists dreaming of utopia who don’t care about who pays.
    Karl Marx
    11th Oct 2019
    10:39am
    ROFL MarkAdel, must be another LNP troll idiot
    roy
    11th Oct 2019
    11:03am
    Thanks MarkAdel, have you noticed that anybody who doesn't agree with Karl Marx is a troll, very strange?
    MarkAdel
    11th Oct 2019
    11:17am
    I don’t think Karl can help it.
    He obviously has a head injury.
    Why else would he defend Labor.
    I don’t think he can be cured.
    Karl Marx
    11th Oct 2019
    6:30pm
    roy & MarkAdel, pair of numb nuts, I don't support ALP & especially LNP but if you both want to post comments that are totally no contributory then that's your prerogative but you both only support LNP & post anti ALP stuff so one can only come to the conclusion that you are both troll for the LNP
    Now if you posted comments that contributed to the actual post instead of putting people & other posters down then we may have a different opinion but I doubt that very much as it take a level of intelligence to be a contributor so it's obvious you both a pretty unintelligent.
    You can post whatever about me but you will only come to wrong conclusions & basically DILLIGAF anyway, nope. ROFLMFHO
    roy
    13th Oct 2019
    2:08pm
    Enlighten me Skid, exactly what do you contribute to this site?
    ex PS
    15th Oct 2019
    11:09am
    If we are going to make it harder for the elderly to have a good quality of life, it is time for us to look at giving them a good quality of death. I get the feeling that the insurance companies want to keep the elderly alive as long as possible so as to keep the profits coming in.
    Maybe we should be looking at a system where by lifetime health insurence members get a rebate paid into their estate if they have not accessed the system to a s ignificant degree.


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