Medibank says more action required on 'second-wave' reforms

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Medibank has published its submission to the federal government's consultation paper on 'Private health insurance reforms – second wave'.

The government has announced plans for a new round of reforms to the sector, following on from changes announced in 2017.

The proposed 'second wave' of reforms include increasing the age for dependents to maintain cover under family policies, expanding home and community-based rehabilitation care, extending funding to at home and community based mental health care, as well as applying greater rigour to certification for hospital admission.

"Reforms to private health insurance need to enhance its value, affordability, and sustainability in the long-term, which will consequently place more downward pressure on premiums and help boost participation," said Medibank's head of healthcare and strategy, Dr Andrew Wilson.

"It is critical to recognise that reforms like this will fundamentally strengthen Australia’s dual public-private health system and can significantly reduce health cost growth for taxpayers and consumers.

"Given the world-leading outcomes of Australia’s mixed public-private healthcare system, it is critical that the Commonwealth recognises that the second wave of private health insurance reforms is not an end point – further reforms are needed to ensure sustainable cost growth across both the private and public health systems over the long-term."

Dr Wilson said Medibank believes the government needs to pursue other reforms, including the pricing of prostheses.

"Address the inexplicable and unnecessary increase in prostheses costs in the private healthcare system versus the public system, which will have a material and near-immediate impact on premiums," he said.

Private Healthcare Australia used its 2021-22 pre-Budget submission to argue for a range of reforms to coverage for prostheses.

The association called for the removal from the Prosthese List of 67 'non-prostheses' groups comprised of items such as adhesives and sponges. It also proposed the phased adoption of an episodic diagnosis-related group (DRG) based prosthesis funding model. This would involve the independent setting of reimbursement amounts based on the 'bundled' prosthesis component of a procedure. 

The Medical Technology Association of Australia says the changes would risk patient access to new medical technologies.

Dr Wilson also said Medibank believes the government should encourage greater utilisation of out-of-hospital and alternative care, instead of in-hospital care, especially for chronic diseases.

"The current system discourages growth of out-of-hospital care, remains fragmented and provides little coordination that could deliver enhanced outcomes and experience for patients and lower premiums," he said.

He said the company also supports greater cost, price and quality transparency in the health system, the accelerated adoption of the value-based funding of healthcare, as well as the introduction of more incentives for employers to fund private cover for employees and their families.

"Medibank will continue to pursue programs that deliver value for our customers, as well as further cost saving measures to place downward pressure on premiums. But substantive reform by the Commonwealth is necessary to ensure the value, affordability and sustainability of private health insurance in the long-term," said Dr Wilson.

"While Medibank welcomes the second wave of proposed private health insurance reforms, more must be done if greater downward pressure is to be applied to limit cost growth in the health system."