Sector responds to reform announcement

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The private health sector has welcomed health minister Greg Hunt's reforms of private health insurance and the pricing of medical devices.

Medibank Private, Bupa, NIB, HCF, along with associations representing insurers and private hospitals have backed the reforms that include the introduction of a Lifetime Health Cover discount, a further $300 million in savings from the Prostheses List along with a strategic agreement between government and the medical device sector, the introduction of product categories (Gold/Silver/Bronze), an extension in coverage for mental health services and the development of standardised clinical terminology.

Matthew Koce, CEO of hirmaa, the representative organisation of 24 not-for-profit, member owned, community based and regional health funds, joined Private Healthcare Australia in welcoming the reforms.

“Health funds return to consumers around 90 cents of every premium dollar as benefits. Therefore the only opportunity for reducing costs is in the health supply chain. That is why we are pleased to see next year’s prostheses prices cut by $188 million,” said Mr Koce.

“Prostheses accounts for around 14% of the cost of an average hospital policy. $188 million in cuts equates to an average saving of around over $34 per policy.

“The private health insurance industry has committed to pass on to consumers all savings achieved through prostheses pricing reform,” he added.

CEO of the Australian Private Hospitals Association, Michael Roff, said his members welcomed discounts for younger people and easier access to mental health services, but remain concerned over the absence of any actions on so-called ‘junk’ policies.

Government decided to maintain the current minimum product standards for private health insurance, and therefore retain the low-value products often referred to as 'junk', on the basis they can be important for people on fixed incomes, people living in rural and regional areas, and people who want to access private services in public hospitals.

“It’s disappointing," said Mr Roff. "Not only has the Government not addressed the issue of junk policies, it has, in fact, entrenched them with the new ‘basic’ category. Junk policies are a major cause of consumer dissatisfaction when they discover they don’t have cover for private hospital treatment when they need care.

“If the intent of the private health insurance rebate is to take pressure off public hospitals, then there is no policy justification for applying the rebate to junk policies,” he said.

Medibank CEO Craig Drummond described the reforms as positive and likely to improve the affordability, value and transparency of private health insurance.

“Affordability in the health sector is an issue of concern for our customers. This reform package is essential to keeping premiums affordable for our customers with Medibank committing to return every dollar of these savings to customers,” said Mr Drummond.

“In an environment where the cost of healthcare continues to rise, reforms like this are paramount to addressing the issue of affordability."

Bupa managing director of Health Insurance, Dr Dwayne Crombie, said introduction of a discount to attract more members aged under 30 is a critical reform that will help address the recent decline in membership of young people.

“A community rated health insurance system works best when you have broad participation across all age groups, not just older or less healthy people. Any measure that encourages young people to join is therefore very important," he said.

nib CEO, Mark Fitzgibbon, said the reform package highlights Mr Hunt's decision to deal with what he described as the "systematic overpricing" of medical devices.

"Patients in private hospitals have been paying wildly inflated prices for medical devices, sometimes as much as five-times what it costs in the public system for exactly the same device. It's bordering on a scandal and all credit to the Minister in taking on the self-interests that have perpetuated the madness.”

Mr Fitzgibbon also said nib and other insurers had made “iron clad undertakings” to the Minister to pass on reduced medical device prices to policyholders in the form of lower than otherwise premiums.

According to HCF CEO, Sheena Jack, “A review of low value admissions is exciting for patients – health care needs to be reset to focus on patient outcomes – that means the right treatment, at the right time and in the right setting. In some cases this might be moving away from low value procedures. We have done significant work in this space and look forward to sharing what we have with Mr Hunt and his team as they review this area of the system."