'More regulation and more bureaucracy is not the solution'

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Private Healthcare Australia chief executive Dr Rachel David says the last thing the system needs is more regulation and bureaucracy.

There is no question Australia’s health system is under significant pressure. As we continue the manage additional demands on the system as a result of COVID-19 and the mental health crisis, and look for new and innovative ways to deliver better health outcomes for consumers, it is disappointing that the AMA is seeking solutions in further regulation.

Working in the public interest means reducing red tape, cutting costs where possible, and ensuring high-quality care. If extra laws and additional bureaucracy are the answer, we are asking the wrong question.

One of the least useful tools to improve health outcomes in the current environment would be in the form of an additional layer of regulation. We need our system to work in the public interest, rather than a contest where the government of the day seeks to balance vested interests. We need action, not extra bureaucracy.

The AMA has certainly identified many key issues. Our public hospital waiting times have blown out, our GPs are overworked, the 2021 census reported that more than eight million Australians have a long-term illness, our population is aging and demand for healthcare increasing, consumers want flexible healthcare options, they want their health funds to pay for healthcare outside the hospital, they want digital, convenient options. This is not the time for another regulator with additional powers of enforcement.

The AMA claims PHI is on the brink of being unsustainable. According to APRA there have been seven consecutive quarter of growth in PHI membership; certainly affordability of premiums is a major concern as are increasing cost of living pressures and health funds are doing all they can to manage this.

The best way to keep premiums low is to reduce waste in the system, with reducing medical device pricing the easiest low-hanging fruit. It is outdated regulation, and seeking to balance stakeholders’ vested interests rather than working in the public interest, that forces private insured Australians to pay 30-50 per cent more for medical devices than comparable countries overseas.

Historically, specialist regulators have had relatively short life spans. Many have been discontinued or replaced because of changes to the overarching regulatory framework which have made them redundant. The Private Health Insurance Administration Council (PHIAC) was rolled into APRA due to overlap and duplication.

An independent regulator – not answerable to the people through the minister and the parliament – is much more likely to be captured by stakeholder interests. Look at how casinos have been regulated, and the scandals in liquor and gaming. Remember how milk used to be regulated, meaning consumers paid way too much and there was no choice in supply. We are currently seeing the cracks appear in the regulation of the energy market, where it’s easier to ship energy offshore than sell it in Australia.

There’s a good reason that governments generally want all Australians to have the same laws applied to them and for them – that’s why we have an overarching competition law, and overarching law for all corporate entities and other laws applied equally across the community. Special regulators are more likely to work for special interests.

Over regulation stifles innovation and the ability for industry to adapt to change. Academics from the London School of Economics and MIT have concluded that firms may be discouraged from investing in innovation in the face of regulation.[1] The health sector, especially in the current environment needs the flexibility to adapt rapidly to the challenges and changes in the industry. It must not be hamstrung a bureaucratic pattern of complying with rules mechanically, rather than seeking the best patient outcomes.

What Australia’s health sector needs now more than ever is the capacity for innovation and flexibility to deliver the services consumers demand and deserve. More regulation, and more bureaucracy is not the solution.

Instead of a new regulator to balance special interests, let’s give the new Minister and new Government the opportunity to display the courage to say no to the vested interests, and govern for all Australians.

Dr Rachel David