More work required, says Defence Health chief

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One private health insurance leader has sounded a note of caution about reforms announced by health minister Greg Hunt.

According to Gerard Fogarty, CEO of Defence Health who is also on the Board of Private Healthcare Australia (PHA), the reforms have delivered a mixed outcome.

"There are two issues facing Australians with private health insurance that I was hoping the Government would address: transparency and affordability," he said.

"I am pleased that the announced changes start to address these issues, but they are far from complete or sufficient to immediately reduce the pressure consumers are experiencing.

"The headlines are simply wrong when they state that the changes will result in significant premium reductions. Forming committees to look into matters like out-of-pocket expenses is just hand wringing. I can't think of any other market where consumers are so disadvantaged when it comes to purchasing decisions. The Government knows the issues. It simply needs to act."

"The cost shifting in public hospitals’ emergency departments needs immediate intervention. It is scandalous that some administrators cajole patients to use their private health insurance for no benefit," said Mr Fogarty.

A recent Department of Health discussion paper found 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.

The discussion paper found that, if the number of private patients 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 about 2.5 per cent lower.

Mr Fogarty also took aim over the pricing of prostheses.

"So too the rorting in Government-regulated prostheses pricing. Savings of $188 million in 2018 are welcome and long overdue, and they will be passed on to consumers in full. However, we know that the real savings would be much, much more than that if the system ensured that consumers pay no more for a prosthetic device in a private setting than those in the public system."

Government will continue to consider a number of reforms to the pricing of prostheses, including international reference pricing and even a system of price disclosure, along the lines of the policy operating in the Pharmaceutical Benefits Scheme (PBS).

Under that policy, which is expected to deliver $25 billion in savings during the current decade, manufacturers of PBS-listed medicines are compelled to regularly disclose the price at which the actual sell the product. The 'disclosed' price is then used as the basis for ongoing price adjustments.