PHA: Time to restore or preserve rebate

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Private Healthcare Australia (PHA) has proposed reforms it says would help address concerns over the rising cost of healthcare.

A key recommendation in the association's 2019-20 pre-Budget submission is for the government to restore the Private Health Insurance Rebate to 30 per cent for low and middle-income earners or at least arrest the decline to maintain it at current levels.

The value of the rebate has declined in recent years with successive governments introducing a range of reforms including means testing and lower annual indexation. The result has been to increase the proportion of premium paid by consumers.

“Financial incentives including the means-tested rebate are a proven way to promote participation and keep private cover more affordable for all Australians," said PHA chief executive Dr Rachel David.

"PHA research has clearly demonstrated that the private health insurance rebate is a highly efficient way of funding non-emergency surgery and in-hospital mental health care.

“As of June 2018, 54% of the Australian population have a private health insurance policy, however without further reforms to address rising healthcare costs participation could drop to 30% by 2030-2035. This will result in longer hospital waiting times, and a shortage of beds for the people who need them most.”

Dr David said the association's reforms could reduce spending in the short term and halve annual healthcare inflation to just 2 to 3 percent over the long term while maintaining high quality care and access. 

She said these reforms would not only make private health more affordable but could deliver savings for areas of Medicare.

Dr David said the success of the private health insurance reforms announced in 2017 and introduced last year meant this year’s premium increase of 3.25 per cent was the lowest in almost two decades.

“It is time the healthcare industry repeated the successful collaborative effort, started by the Coalition government and delivered by the 2018 PHI reforms," said Dr David.

"The reforms were two years in the making and developed by stakeholders from across the health system including health funds, medical professionals, hospitals and consumers groups. These reforms are proof that when industry works together, we can achieve more affordable outcomes for the 13.5 million Australians that choose to have private health cover.”

The PHA has also recommended the removal of low-value and wasteful items from the Medicare Benefits Schedule (MBS).

It argues this would allow private health insurers to fund specific outpatient services and help consumers avoid accumulating co-payments,.

The association has also proposed additional reforms to the pricing of medical devices.

It says the government should consider a national procurement strategy, which includes international reference pricing and price disclosure, and health technology assessment of new products.

The Medical Technology Association of Australia has criticised the proposal and said through the recent reforms its members are responsible for delivering the lowest increase in private health insurance premiums in two decades.

Dr David said the only way to put downward pressure on premiums in the context of rising utilisation was to address wasteful input costs.

“Wasteful costs in the health system are not unique to the private sector, and they have multiple causes. Often this is down to health system design and regulations, which are not fit-for-purpose. This is why payors and providers need to work together towards improved outcomes for consumers,” she said.

PHA is also proposing a more affordable and accessible dental health system through contracting and more vertical integration with practices.

“Extending the efficiencies of private funders of dental care to the public sector could deliver further savings to the government. This can achieved by contracting out Commonwealth dental health program funding and enabling health funds to tender as service providers,” said Dr David.

One-in-two Australians claim for dental services through a health fund. Health funds pay out over $2.6 billion per annum in dental benefits.

“None of the proposed reforms are radical, they are sensible and necessary to ensure our health system continues to deliver high quality, accessible and affordable care for all Australians. Health funds are committed to delivering value for money by funding evidence-based care, at an affordable price,” added Dr David.