Private health insurance premiums would have been around 0.5 per cent lower per year over the past five years had the growth of privately insured patients in public hospitals matched that of privately insured patients in the private sector.
The issue of states ‘harvesting’ privately insured patients as a source of revenue for public hospitals has emerged in recent years. Department of Health officials were questioned on the issue during the recent Senate Estimates hearing.
Some states engage in systematic efforts to encourage a patient to opt to be treated privately in a public hospital. However, in some circumstances, the patient can receive virtually no benefit and will essentially be treated as a public patient.
According to one senior official, in response to questions at Senate Estimates, “Certainly, the minister [Greg Hunt] has had a number of conversations with his ministerial colleagues and put out a discussion paper last year in relation to different options for dealing with private patients in public hospitals, and we've contributed to that work."
According to the discussion paper, the percentage of public hospital separations funded by private health insurance increased nationally from 10.5 per cent in 2010-11 to 14.1 per cent in 2014-15.
It found that, if the number of private patients treated in the public sector had grown at the same rate as private patients in private hospitals since 2010-11, premiums in 2015-16 would have been approximately 2.5 per cent lower.
“We had submissions from the state and territory governments. In the context of the next healthcare agreement, the draft heads of agreement proposes some joint work between the Commonwealth and state governments to look more closely at this,” said the official at Senate Estimates.
They continued, “There is evidence, and the general concerns would be that, if there's any suggestion the patients are being unduly influenced or coerced to make a choice.”
Under the draft heads of agreement, governments will, "...develop reform initiatives to improve admission policy and practices to support patient choice, and to deliver comprehensive data provision and more consistent financial reporting on private patients."