Department of Health annual report confirms rebate fall

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Spending on the private health insurance rebate continued to fall during 2016-17 according to the Department of Health's annual report.

According to the report released yesterday, the day before it was officially required to be tabled, spending on the rebate finished the year at $5.994 billion. This was $60 million less than forecast in May.

The annual report also confirms the $255 million fall in spending on the rebate compared to what was originally forecast. The $255 million is part of a more than $1 billion downward variation in forecast spending on the rebate over the forward estimates.

Spending on the rebate has steadily declined in recent years following a series of policy changes that have diminished its contribution to private health insurance premiums.

The changes have included means testing, changes in indexation and its removal from Lifetime Health Cover loading, meaning what was once a 30 per cent government contribution to premiums is now a maximum of around 26 per cent.

The result has been an ongoing annual reduction in its value and emerging affordability issues for Australians with private health insurance.

The annual report revealed the Department expected a significant fall in the number of Australians with private health insurance in 2016-17, from 11.3 million to 10.9 million, but the number actually remained steady.

In 2016-17, 97 per cent of applications submitted through the Prostheses Listing process were completed within 22 weeks, compared to a target of 87 per cent.

Government established the Private Health Ministerial Advisory Committee in September 2016. The committee, which met nine times during 2016-17, was tasked with providing advice on reform options.

Health minister Greg Hunt recently announced a raft of reforms to private health insurance and the pricing of medical devices.

The reforms included the introduction of a Lifetime Health Cover discount, a further $300 million in savings from the Prostheses List along with a strategic agreement between government and the medical device sector, the introduction of product categories (Gold/Silver/Bronze), an extension in coverage for mental health services and the development of standardised clinical terminology.