PHIO 'diluted and diminished' by merger

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The former head of the Private Health Insurance Administration Council has questioned the decision to roll the operations of the Private Health Insurance Ombudsman into the much larger Commonwealth Ombudsman. 

Sean Gath served as CEO of PHIAC for seven years, until its abolition in 2015, and now works as a Canberra-based consultant.

In a submission to the Senate inquiry considering the enabling legislation for reforms of the private health insurance sector announced by health minister Greg Hunt last year, Mr Gath describes the original decision in 2015 to abolish the PHIO as a standalone agency as a "mistake".

The reforms announced by Mr Hunt include an extension in the powers of the ombudsman in its oversight of private health insurers.

According to Mr Gath, its abolition as a stand-alone agency has "diluted and diminished" its role, but that the changes are "worthy of support" to the extent they "seek to repair some of the damage done."

He does question the extension of "compulsory powers of entry and search" to the PHIO.

"The circumstances in which such powers might be employed are not clearly defined, nor are the rights to review of such powers by the parties affected (primarily health insurers and brokers)," he says.

"Such powers sit somewhat jarringly with the long-standing relationship PHIO has had with the PHI sector and are likely to require the formulation of new policies governing appropriate use and engagement of additional staff experienced in the exercise of such powers, with associated budgetary implications.

"Some clarity around the minister’s capacity to instruct PHIO in the use of coercive powers may also be warranted. The recent experience concerning BUPA and its decision to restrict access to gap cover arrangements is an example where concerns of this nature may have arisen with a different set of powers."

Mr Gath also uses his submission to back a Productivity Commission inquiry into the private health insurance industry.

He says an inquiry should consider, amongst other things, whether private health insurance "can and should" be more integrated into the wider health system and the "effectiveness and value for money of government rebates and other forms of nonfinancial support for participants in the industry."