PulseLine has been closely following the ongoing private health insurance reform agenda. This week the final piece of the puzzle was revealed with the Minister for Health, Greg Hunt MP releasing the Rules that give effect to the product categorisation – basic, bronze, silver and gold – that will come into effect on 1 April 2019.
The Government will be hoping these changes will deliver another record low premium increase. Last year the medical technology industry delivered cuts to the price of medical technology which delivered the lowest premium increases in 17 years.
Due to delays in Parliamentary process the Minister has provided insurers with the option to transition to the new policies by April 2020 but it is anticipated the major providers will be ready on 1 April 2019.
The Minister for Health, Greg Hunt MP said upon announcing the changes that consumers, for the first time, will be provided clearer information to allow them to compare different health insurance policies and choose the cover that best suits their needs.
“These reforms will have an overall neutral to -0.3% impact on premiums compared with current policy settings,” Minister Hunt said.
These reforms, whilst welcome, do not address the fundamental issue around the overall value of private health insurance. CHF maintains its call for an independent inquiry into private health insurance.
“CHF has long argued for consumer-friendly reforms in health insurance to reduce the frustration and uncertainty so many people experience. We believe the development of these four tiers of cover offers a path to more certain and transparent arrangements,” CEO of the Consumers Health Forum, Leanne Wells said.
But plenty of stakeholders have expressed concerns consumers will have to pay more for an effective product that covers them for the things they need.
President of the Australian Society of Ophthalmologists Dr Peter Sumich says under the reforms it will be “cheaper to pay for your private cataract surgery from your own pocket and save the money you would spend on a poor insurance product”.
Chronic pain treatments will only have to be included in the most expensive Gold level cover.
“We don’t want a situation where many are forced to drop their PHI cover altogether, further exacerbating access issues across the public health system,” Carol Bennett, CEO of Pain Australia said.
The Medical Technology Association of Australia (MTAA) has been supportive of the Government efforts to simplify and make transparent private health insurance policies but remains concerned of the unintended consequences.
“It’s disappointing that consumers that need access to life saving and life changing medical devices will in most cases need a gold level policy to do so,” Ian Burgess CEO of the MTAA said.
“There is only one definite winner today – big private health insurers. The Deloitte modelling that informed this outcome assumes that private health insurance industry would maintain profit levels of 11.5%.
“We endorse AMA’s comments the Deloitte Report should be released, analysed and debated. We have simply been seeking a 12-month delay to these changes, accompanied by a 12-month information campaign, to ensure consumers can make an informed choice,” Mr Burgess said.
Stephen Duckett, a health economist at the Grattan Institute, warned that the new rules will leave thousands of consumers facing significant premium increases.
Even private health insurers now admit that some consumers will be worse off.
“There will be winners and losers but the Government’s PHI Reform process must deliver real change to improve the affordability and value of private health cover. There’s no alternative,” Dr Rachel David, CEO of Private Healthcare Australia said.