Private Healthcare Australia chief executive Dr Rachel David writes that Australians should not have to pay 30 per cent more than people in other countries for the same medical devices.
The current medical device regime keeps private health insurance premiums high and ensures that big multinational medical device companies make much larger profits in Australia compared to other countries.
The cost of medical devices (prostheses) is one of the largest drivers of premium increases. Currently, the price of medical devices in Australia is around 30 per cent higher than in countries such as New Zealand, France and the UK. The exact same stem item used in hip replacements costs more than $4,000 in Australia, whilst in New Zealand and the UK is costs just $1,800.
In some cases, such as cardiac stents, private health insurers pay up to five times as much for the exact same medical device. Approximately $5.5 million is spent on medical devices in Australia every day. Around $2 million every day is shipped offshore in supernormal profits for Big MedTech companies.
The federal government has acknowledged the current price setting regime (Prostheses List) is unfair for consumers and announced measures in the 2021 Federal Budget to fast-track changes to medical device pricing, but multinational medical device companies who profit from the high prices of medical devices, are slowing down critical reform.
The Big MedTech industry has never addressed the core issue of over-priced generic medical devices in Australia and continues to raise red herring issues in the media and use scare tactics as a distraction to stymie reform.
By changing medical device costs, private health insurance premiums will reduce, with no effect on the quality or accessibility of the devices that doctors can recommend. These reforms are not about removing options for doctors or patients, but rather about ensuring Australian consumers pay a fair price for medical devices and for their private health insurance.
APRA’s latest quarterly report on private health insurance has revealed claims for medical devices used in surgery have far outstripped claims for all other health services, out of proportion to the number and type of surgical procedures performed. Benefits growth in medical device claims at 12.3 per cent outstripped claims for medical services at 6.9 per cent and hospital treatment benefits at 9.8 per cent in the June 2021 quarter. In the year to June 2021 compared to the year to June 2019 (pre-pandemic), benefits expenditure for medical devices increased by 7.4 per cent compared to 3.8 per cent for medical services.
Sadly, this issue is not new, but in the current COVID-19 pandemic if this trend continues, there are significant risks to Australia’s health system.
Without the changes to the current medical device pricing regime foreshadowed in the 2021 Federal Budget, people will give up their private health insurance as premiums rise, putting extra pressure on our public hospital system at the worst possible time.
As we move out of the COVID-19 pandemic, there will be increasing pressure on our health system. There are multiple factors that will put upward pressure on premiums including demand for inpatient mental health services, increased demand for elective surgery due to a blowout in public wait times, and people presenting to health services with more advanced disease as a consequence of lockdowns preventing access to routine health checks and making a healthy lifestyle more challenging.
Taking urgent action to reform the way medical devices are priced is the key to delivering savings to Australian consumers and protecting the future of our world-class healthcare system. Without a strong private healthcare system, our public hospitals will be overwhelmed and won’t be able to provide the same level of care to those who need it most. Reform of medical device pricing must be prioritised so health funds can begin to offer premium relief to Australian families as soon as possible.
With millions of Australians doing it tough right now, and hospitals coping with increased demand from patients suffering COVID-19, the Federal Government must see through the delaying tactics of big medical technology companies and urgently deliver on much-needed reform to the Prostheses List.