Latest statistical update triggers renewed debate over PL reform

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A renewed debate over the reform of medical device pricing in response to the latest data released by the Australian Prudential Regulation Authority (APRA).

The data has revealed a 1.8 per cent increase in the number of Australians with private health insurance during the year to the end of September 2021.

“With increasing pressure on the public health sector and blowouts in waiting lists for surgery around Australia, private health insurance has become more sought after than ever before,” said Private Healthcare Australia chief executive Dr Rachel David.

“Unfortunately, after years of negotiations and numerous promises as recently as this year’s Federal Budget that PL [Prostheses List] reform was imminent, Australians are still paying the highest prices for medical devices in the world. It’s time for the Morrison Government to act on reforms outlined in the Budget to bring prices in line with the rest of the world.

“Under the Government’s current pricing agreement with big multinational medical device companies, patients are forced to pay 30-100 per cent more for the same medical devices compared to France, New Zealand and the UK, and this is reflected in health insurance premiums.

“Premium rises above inflation will impact people and families already facing cost-of-living pressures as Australia moves out of the pandemic."

Dr David said, “The Government needs to stand up to multinationals and private hospitals who benefit financially from overpriced medical devices and urgently implement the PL reforms they committed to in the Budget. These reforms would stop health insurers being forced to pay $10 billion more for medical devices over the next five years and keep pressure off premiums.”

Dr David said the APRA report also identified significant growth in out-of-pocket costs. “While some in the health industry have been impacted financially during COVID lockdowns, increasing patient co-payments is not the solution,” she said.

The Medical Technology Association of Australia said the APRA data has only highlighted the need for private health insurers to return the deferred claims liability set aside during the pandemic.

In the early period of the pandemic, the prudential regulator directed insurers to set aside funds for future claims in response to the temporary halt on elective surgery and other health services.

“Today’s data is further evidence that the COVID-19 pandemic has delivered a financial windfall for big corporate insurers, in contrast to the hardship experienced by many of their members,” said MTAA CEO Ian Burgess

“They should be forced to return these substantial profits to their members who continued to pay for their premiums during the pandemic, despite the restrictions on their access to care. MTAA does not believe that people with private health insurance should pay more for their insurance while shareholders pocket increased dividends," he said.

“Given the clear statement from APRA that insurers should not gain financially from COVID-19, we call on the government to explore all legislative and regulatory options to ensure the insurers’ COVID bonus is returned to members and not used to increase management bonuses and shareholder profits.”

The association said it is pleased Australians benefited from nearly 3.4 million devices implanted in the last year.

"Average benefits for prostheses are now on average nearly 16% lower than they were 5 years ago, delivering increased savings to insurers of over $1.4b since 2017," said the MTAA.