New report advocates 'pathways' to lower premiums

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A new report commissioned by the Medical Technology Association of Australia says a range of reforms could contribute to making private health insurance more affordable.

The report, Keeping Premiums Low: towards a sustainable private healthcare system, was developed by economic advisory firm AlphaBeta.

According to the report, reforms designed to improve operating efficiency, reduce admissions, improve models of care and increase the focus on evidence-based medicine, could reduce private health insurance premiums by up to nearly $1 billion by 2022.

“For both the public and private systems to be sustainable into the future, we must embrace a new approach that has the dual purpose of sustainability and profitability,” said Dr Andrew Charlton, Director of AlphaBeta.

Dr Charlton was an economics adviser to former prime minister Kevin Rudd.

The report says improved efficiencies, such as further industry consolidation, could save the sector $210 million.

“Optimising models of care is important for short term savings, and critical for the longer-term sustainability of the health system," said Dr Charlton.

“Policy levers such as reducing the number of potentially preventable hospitalisations (PPH), reducing overtreatment of patients, promoting care in the community and reducing readmissions can provide a $290m saving to private health insurance premiums,” he continued.

Dr Charlton also pointed to the contribution medical technologies could make to improving preventive and primary care.

"Telehealth, remote diagnosis, patient monitoring apps and even advances in home movement monitoring for ‘at risk’ patients can all reduce costs to the system. Many of these devices are not covered by private health insurance and there is often no consistent public funding pathway to facilitate widespread adoption."

He also backed further reforms to tighten rules around benefits, building on the exclusion of natural therapies for which there is no evidence.