Health insurance boons identified

An exclusive document obtained by YourLifeChoices on health insurance reforms reveals the expansion of mental health coverage and extra travel benefits for regional policy holders will be a boon for low-income, older Australians. 

However, other elements of the reforms may be too complex to play out, such as changes to  treatment of private patients in public hospitals, according to a summary provided by St Vincent’s Health Australia (SVHA).

SVHA, Australia’s largest Catholic not-for-profit health and aged-care provider, also reported that policy holders would theoretically have premiums reduced once the recommended cuts to the prostheses benefits take place from February.

Next year, insurers stand to save $188 million through reduced spending on tens of thousands of products on the prostheses list, including feeding tubes, gastric bands, eye lenses, stents and other small medical items used in surgery.

Insurers have said that every $200 million in prostheses benefits cuts decreases premiums by one per cent. Thus, a policyholder paying $1000 in health insurance a year could expect to save $10 on their premium.

“Expenditure on prostheses accounts for 14 per cent of private health insurance hospital benefits paid annually,” the SVHA summary said.

“Evidence suggests that the prostheses list benefits are generally inflated when compare to the equivalent prices paid for devices in the public sector.”

SVHA welcomed the enhanced mental health support to be introduced next year to improve   access to inpatient services.

Currently, only high-level policies offer significant cover for mental health care.

“Patients with basic and medium level cover who require overnight or multi-day care in a private hospital for a serious mental health conditions will usually face large out-of-pocket costs,” SVHA said.

“Waiting periods for upgrading cover can prevent patients from accessing timely care.”

The Government’s changes will, from next April allow, mental illness sufferers to upgrade their health cover and avoid the existing two-month waiting period for in-hospital care.

And in one of the biggest pluses of the reforms, sick Australians living in regional and rural areas will have extra travel and accommodation benefits covered by their policy, depending on which insurer they use.

From April 2019, insurers will offer the additional benefits under hospital cover instead of only under general treatment policies.

SVHA said: “This will benefit regional and rural patients and their carers who need to travel for hospital treatment undertaken away from home … when that treatment is not available in their area.”

New measures to reclassify the eligible benefits in each of four health insurance policy standards – basic bronze, bronze, silver and gold – “will allow people to clearly understand the product they are buying,” SVHA said.

Opinion: Are these the kindest cuts they could muster?

The virtually-universal lukewarm response to “the biggest shake-up to private health insurance” the industry has seen is, to say the least, understandable.

While there are some moderate wins in the Federal Government’s reforms – quicker access to mental health services and subsidised transport and accommodation for out-of- town patients – there really is nothing convincing in the sparse detail to suggest health insurance premiums will be cut.

Premiums have soared on average close to 6 per cent each year since 2010. It is believed the Government hopes that next year’s rise will be less than 4 per cent.

Fat chance! First of all, why are they going to rise by close to double the inflation rate? Second, where are the costings that suggest insurers will reduce their outlays significantly enough to pass on savings to policyholders? Third, who is going to police the trickledown savings? And finally, who is to say there isn’t some unexpected price shock around the corner – like a warranted increase to nurses’ wages – that causes insurers to jack up premiums instead?

You know, unexpected price shocks such as when carbon pricing was scrapped and we were all promised much lower electricity prices? Remember that?

What happened instead was the delivery of the steepest hikes in power bills in living memory. All because someone forgot to factor in that the electricity distributors were intent on ‘gold-plating’ their poles and wires and were given permission by the regulators to pass those costs onto us.

St Vincent’s Health Australia (SVHA) has summarised the expected outcomes of 17 government proposals to make ‘private health insurance simpler, more affordable’. Just four of them were expected to ‘reduce’ private health insurance premium ‘increases’. You read right. Any likely decrease would be to the amount extra that premiums will cost going forward. The four measures are:

  • higher excess charges to be paid by policy holders in exchange for lower premiums
  • a cap in the amount medical device makers charge for their products
  • a 10 per cent cut to what private health insurers have to pay for thousands of medical products used in surgery, such as stents and catheters, as detailed on the prostheses list
  • knocking off a slew of natural therapies from being subsidised.

It is safe to say that none of these strategies will actually make much of a dent in what you pay for health insurance.

Even if the insurers’ estimate is correct that for every $200 million slashed from the prostheses benefits list, premiums will cost one per cent less, how much is that? A policyholder paying $1000 in health insurance a year could expect to save $10 on their premium. Wow … hold the front page.

And as for the other category killer feeling the scalpel – natural therapies ­ well, this might turn out to be an own-goal. The Government has decided that there is “no clear evidence demonstrating the efficacy of the listed natural therapies”, which includes little-heard of and probably much less used alternative treatments such as Rolfing, Buteyko and Feldenkrais.

But other therapies, such as yoga, tai chi and Pilates, which promote movement and flexibility, surely do have benefits that keep people healthy and out of the medical system. And further, they are more likely to appeal to younger Australians who the Government is desperate to attract to private health insurance. Removing cover for therapies such as these is surely only going to dissuade healthy young people from bothering with insurance?

The Government’s proclamation that these reforms are the “biggest shakeup” in the sector is a huge exaggeration. There is nothing “big” about them, especially on the sort of savings that policyholders can expect.

Currently, there is a Senate inquiry under way called ‘Value and affordability of private health insurance and out-of-pocket medical costs’. It is due to report on 27 November.

Curiously, it has virtually the same terms of reference that the federal Health Department used ahead of announcing its reforms last week.

There seems to be too much talk and not enough action on whether health insurance is ever likely to be reasonably affordable.

How many more probes do politicians need to discover the obvious? Are we all being taken for a ride by insurers? Do you have private health insurance? Do you think it is good value? Should natural therapies be subsidised by health policies?

Related articles:
Insurance overhaul ignores seniors
Understanding health insurance
Do you need extras?

Written by Olga Galacho

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