Private hospitals call for rebate restoration

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The Australian Private Hospitals Association has used its 2020-21 Federal Budget submission to call for the restoration of the Private Health Insurance Rebate to 30 per cent for people in the lowest income tier.

The Rebate was the subject of several rounds of reform during the past decade, including means-testing and a change that saw its annual growth linked to inflation rather than the rising cost of premiums.

The impact has been a gradual reduction in the Rebate's contribution to premiums. 

According to APHA CEO Michael Roff, “Low-income Australian households face a double whammy of increased premiums and reduced rebates when it comes to private health insurance. Every year the value of their rebate goes down, while their private health premiums increase.

“For example, in 2019, a high-income earner who did not receive the rebate would have experienced a premium increase of 3.25 percent. However, low-income earners would have experienced a real premium increase of 3.74 percent.

“This doesn’t pass the fairness test, nor does it achieve the aim of the rebate – to incentivise Australians to take up private health insurance.”

Mr Roff said APHA is calling on the federal government to restore the Rebate to 2013-14 levels for low-income earners.

The change would return the rebate to 30 per cent for under 65-year-olds, 35 per cent for 65-69-year-olds and 40 per cent for those aged 70 years old and over.

“This will reduce premiums for these households by between 2.02 percent and 3.67 percent and cost about $1.4 billion in 2020-21,” he said.

Private Healthcare Australia has also called for the restoration of the Rebate for low-income Australians.

The APHA has also called for action on public hospitals 'harvesting' privately insured patients.

“This practice is punishing patients who can’t afford private health insurance. They suffer with deteriorating health on elective surgery waiting lists as public hospitals push the privately insured ahead of them. Add to that, it is also a perversion of Medicare – care based on clinical need, not ability to pay.

“If this practice stopped, private health insurance premiums would drop by six percent,” said Mr Roff.

The submission also calls for a range of other reforms, including doubling the Medicare Levy Surcharge to incentivise high-income Australians to take up private health insurance, and the introduction of a default benefit for alternatives to inpatient treatments including day, community-based, home-based programs for rehabilitation, mental health and palliative care.

“Private hospitals have developed a range of innovative programs that would reduce costs and improve outcomes for patients. These include services like chemotherapy in the home, ambulatory cardiac rehabilitation, rehabilitation in the home and hospital in the home as part of an early discharge service.

“However, the majority of health insurers refuse to financially support such programs provided by hospitals. Instead, they pay for services provided by themselves and a small number of community providers and direct their members to these services.

“Providing default benefits for these services would allow hospitals to expand and integrate services across the continuum of care. This would increase patient choice and reduce the risk of avoidable readmission,” he said.