Leaders defend sector following Shorten attack

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Leaders of the private health insurance sector have jumped to its defence it following Bill Shorten's attack during his speech to the National Press Club.

In his speech, the Labor leader criticised the sector over premium increases and product exclusions, accusing it of engaging in a "con" and treating their member as "mugs".

While non-committal on any specific reforms during the speech and in response to questions, simply saying a future Labor government would prefer to work with the sector, Mr Shorten and shadow health minister Catherine King both subsequently committed to retaining the private health insurance rebate.

In response, CEO of Private Healthcare Australia, Dr Rachel David, rejected the suggestions consumer were not getting value from private health insurance.

"Well I think the reality is that most consumers that have health insurance do value what they get from it, and the research is quite clear on that," she said in an interview with ABC Radio.

A survey commissioned by the organisation in 2016 found 84 per cent of the 2,384 respondents were somewhat to very satisfied with their private health insurance.

Of the respondents not satisfied, only 15 per cent attributed their dissatisfaction to exclusions. The most significant areas of concern were premiums (72 per cent) and out-of-pocket fees charged by healthcare professionals, including allied health and specialists.

On premium increases, Dr David said the sector acknowledged the frustration felt by consumers and expressed by Mr Shorten. 

"...when household incomes are flat, some household costs are continuing to rise above inflation or CPI and health costs are one of those things. However, I would reiterate that the only reason, the sole reason that health fund premiums are going up is because health funds are paying for more health care.

"And by way of example: just last year, the funds paid for 23,000 more admissions for chemotherapy, close to 5000 more admissions for artificial lenses for blindness, 5000 extra admissions for mental health conditions and the list goes on and on.," she said.

On the growth in the number of policies with exclusions, something Mr Shorten criticised during his speech, Dr David said it reflected policy innovation to meet consumer demand.

"So, for example, we were getting a lot of enquiries from older people who didn't want to pay for pregnancy and IVF, and younger people who wanted an affordable, entry level product into the health insurance market, who didn't want to pay for a lot of conditions that are really associated with aging. So that's how the exclusions came into the market."

nib CEO Mark Fitzgibbon said the sector would welcome a "constructive and bipartisan approach" to a discussion on the future of health policy. 

“The reality is our ageing Australian society is spending more on their healthcare and we need to find a way to pay for it other than taxes because increasingly into the future we’ll have relatively fewer taxpayers for every retired person. We actually need a stronger private healthcare system and Government policy to support this,” he said.

The nib boss described as totally any comparison between premium increases and CPI.

"...CPI only accounts for increases in the cost of goods and services. CPI or cost inflation accounts for less than half of the growth in private health insurance premiums with the main factor being people are purchasing more and more medical treatment."

In relation to out-of-pocket costs, Mr Fitzgibbon attributed the issue to restrictions on what insurers are allowed to cover.

“It’s an anachronism that we can’t pay for doctors outside of a hospital. It confuses customers, leads to higher out-of-pocket expenses and actually encourages unwarranted hospitalisation. Allow PHI to expand cover and out-of-pockets will come down. 

“That about 40% of policies have exclusions simply reflects consumers today having choice. For example, it would be crazy if someone aged 65 could only buy a policy that included obstetrics and orthodontics,” Mr Fitzgibbon added. 

Mr Fitzgibbon said the sector would welcome a discussion with Mr Shorten and shared his goals of affordability, effectiveness and fairness.