Hospitals suggest plan to cut health premiums by six per cent

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

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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    COMMENTS

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    Horace Cope
    14th Jan 2020
    11:55am
    I have no issue with public hospitals treating all patients alike regardless of whether they have health insurance or not. If I present at an ER in a public hospital I will receive exactly the same treatment as a patient who does not have health insurance apart from the bill at the end of my stay. I will pay for some extras as well as an excess and will be out of pocket whereas the non health insurance patient has all treatment covered. This is certainly not fair. We don't pay health insurance to have public hospitals charge for what is given free to others, that is not what health insurance was originally designed for.
    ray @ Bondi
    14th Jan 2020
    3:41pm
    yep you right in that aspect, want an operation, not through the emergency and then it is a different story and one I have had more than once.
    and Please do not call it insurance it is far from that, insure your car and have an accident after the initial paperwork is done it is just pick up a fixed car, health COVER is just THAT, I have it for the wife, and she has had to access it a few times I have received bills from everybody it seems even the cleaner sent one, then I had to fiddle by sending the receipts to medicare then the health fund after PAYING them one by one by one by one it was a headache at all times and for this, I pay an extraordinary amount it is a joke and nothing else.
    older&wiser
    14th Jan 2020
    12:25pm
    I find the above article a bit contradictory. 3 weeks ago I was admitted to hospital as an emergency. I was asked if I was 'Public or Private'. I was an emergency, so wouldn't have made an ounce of difference, and it didn't. I said Public, even though I have Private Health.
    The next day a hospital admin person came to my room (I was in room of 2, but only person) and heavily pushed me to go private. Pressure was extreme. When I queried why, she said that I would not have to pay the excess - instead the money goes to the hospital. I couldn't really get my head around this, but she really pushed, saying that the extra funds would assist the hospital in providing more services.
    I actually felt rather annoyed. This is NOT why I have Private Health Insurance - to benefit Public Hospitals. I stuck to my guns and said, no and she was far from pleased (so much so, I considered making a complaint about her trying to pressure me).
    No wonder our PHI rates are going through the roof.
    KSS
    14th Jan 2020
    12:49pm
    Unfortunately this is now commonplace. What's worse is that if you agree, there are no 'extras' such as private room, newspaper, TV, menu choice etc that you would likely get as a private patient in a private hospital. You still have to pay for those things too.

    I have been subjected to the 'strong-arm' tactics too but in my case I had torn my calf muscle and ended up in A&E. My hospial cover only covers me in case of admission. It does not cover in case of outpatient services or emergency treatment such as a plaster cast and crutches! I knew that and refused but the administrator's constant pressure and so called assurances that I would not have out of pocket expenses (in my case bare faces lies) were tantamount to bullying. I held my gground of course but many would not have done.
    Eddy
    14th Jan 2020
    1:40pm
    A few years ago (in 2013) I was taken to a public hospital by ambulance after collapsing in the street. After I had been in for two or thee days and was responding to treatment I was asked, very politely, if I would be a private rather than a public patient as the hospital received more funding from health insurers than Medicare. It was emphasised that I would receive no preferential treatment over a public patient. There were no 'strong arm' tactics as reported by KSS and at the end of my 6-week stay, no out-of-pocket expenses (other than I had to pay for prescriptions from the hospital pharmacy for on-going medication to take home).
    Since my retirement I have had 3 hospital stays, 1 public and 2 private. I can truly swear that the standard of care is exceptional in both systems.
    Anonymous
    14th Jan 2020
    2:59pm
    I always go private if there is no extra expenses as I then have the option of selecting my own specialist. It is also great the hospital gets paid as that means there is more money available to help those who don't pay. There are also extras like free TV papers and free prescriptions to take home.
    KSS
    14th Jan 2020
    12:42pm
    Reducing cost and complexity of the skilled migration program would result in higher immigration which in turn will place further stress on all medical services especially as there is no requirement for new arrivals to have private health insurance. Therefore, there are no guarantees that skilled migrants would contribute to the private health insurers' coffers which is clearly the intention of this suggestion.

    Other suggestions could include:
    Reduce the age at which the loading on private health insurance kicks in from 30 to 25 and incentivise take-up.

    Redefine the meaning of 'child dependent' to those under 18 and make those aged 19 and over responsible for their own health insurance rather than allowing them to continue under a family policy as if they were still minors. Exceptions to be made for those with a disability claiming disability payments and/or those in fulltime education - up to the age of 25 (with annual transcripts as evidence of not only enrolment but actual study progression).

    Require all permanent residents, business visa holders and other longer term non-citizens to hold private health insurance. Require all visitors to Australia to hold travel insurance
    and ensure that payment is made before service is delivers (as many other countries do). Medicare services should be 'reserved' for Australian citizens; all others should be paying their way. Currently for example, we have the situation where non-resident family members of residents (non-citizens) come to Australia and undergo screening testing e.g. mamograms under medicare as there is no checking of status. Health tourism is fine provided the travellor pays for the services in private facilities much like happens in Asian countries such as Thailand.
    Eddy
    14th Jan 2020
    2:13pm
    I am not sure KSS if these are serious suggestions from yourself or tongue-in-cheek comments on how the health insurance industry is attempting to dilute our health system (ie Medicare and private insurance) by eliminating the competition from publicly funded facilities.
    Anonymous
    14th Jan 2020
    3:11pm
    You won't get too far without a Medicare card unless you pay in our public hospital system and it isn't cheap either.
    Eddy
    14th Jan 2020
    2:05pm
    I am extremely sceptical of the reasons given by the APHA to prevent public hospitals from claiming from health insurers. Even more sceptical that if the measure was accepted, and did save 6%, the insurers would pass this saving onto their customers. Makes a mockery of the claim that private insurance give patients 'freedom of choice' if that choice is limited to private hospitals only. More like self interest I suggest.
    Anonymous
    14th Jan 2020
    3:06pm
    Agree you should have the choice of being public or private in a public hospital especially if you have no choice but a public hospital.
    ray @ Bondi
    14th Jan 2020
    3:44pm
    pass the saving on sure I believe that just the same as privatisation brings the cost, what a load of CENSORED
    Anonymous
    14th Jan 2020
    9:22pm
    Spot on, Eddy, they have NO business to suggest limitation of choice for insured people, and their talk about passing on any savings is just rubbish which will never happen.

    Far better option to reduce costs is to reduce maximum CEO salaries to $1 Mil, and reduce all CEO Bonuses to maybe 20% of salaries dependent on KPIs mainly based on Customer Satisfaction Surveys conducted independently say by ABS.
    Greed factor MUST be attacked if costs are to be reduced.

    14th Jan 2020
    3:02pm
    It is great that you can use your private health insurance in public hospitals as you get to choose your specialist. After once going public and having an inexperienced doctor nearly kill me I would never go public again.
    Robene
    14th Jan 2020
    9:15pm
    I'm not sure what the answer is regarding private health insurance. However I'm on a superannuation pension and therefore I don't receive any benefits from the government - no rebate on electricity, telephone, medication, rates etc. Due to the cost of insurance, I have had to reduce my cover as it is getting beyond my financial capability. I wonder how much longer I can continue to pay it when the cost increases every year.
    Viking
    4th Mar 2020
    1:22pm
    I have an alternative proposal which would cut the cost of private medical insurance far more than 6%.
    Surgeons tell me the standard of care makes no difference whether private or public. Yet one of the biggest costs is over gap surgical charges. My proposal is that all public hospitals have built and offer private wards for those on insurance or who want to pay for them and this is the basis for private cover. These private wards would also provide isolation facilities around the country for times like now. Those who want to take out cover for greedy surgeons who only want to work on selected patients could take out a higher level of cover with no government rebates on this.
    The key to recovery is rest and sleep and a private ward greatly assists with this: otherwise all medical care private and public generally is and should be at the same standard.


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