Sustainability the focus of pre-Budget submissions

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Private health insurers have called for a range of reforms in pre-Budget submissions.

In its submission, Private Healthcare Australia said it "does not request any additional government funding", but suggests options to address sustainability "through sensible policy evolution."

In addition to proposing measures designed to reduce payment fraud and eliminating incentives that encourage the use of high cost hospital care as the default option, the association calls for action against states 'harvesting' privately insured patients in public hospital emergency departments.

The issue also attracted the attention of health minister Greg Hunt, who pointed to evidence suggesting 'harvesting' is driving up the cost of private health insurance, and indicated his intention to pursue the issue through negotiations with the states over new public hospital funding agreements.

"Cost shifting from public hospitals to health funds in Australia now costs over $1 billion dollars per year. This accounts for about 6% of premiums and means that public hospital cost shifting adds more to premium costs than the average year’s premium increase," said Private Healthcare Australia in its submission.

It recommended the practice of states setting revenue targets for public hospitals be banned and the introduction of a Code of Conduct to ensure consumers are treated appropriately, provided fully informed financial consent, and are not approached to elect their status while vulnerable or cognitively impaired.  

Private Healthcare Australia also called for greater transparency in medical out-of-pocket costs and further reform in the pricing of prostheses.

In its submission, Bupa called for action to stop ongoing erosion of the private health insurance rebate. The contribution of the rebate currently declines every year, as it is indexed the consumer price index, which is generally lower than the annual increase in premiums.

According to Bupa, "It is expected to fall below 26 per cent this year for people under 65 years whose incomes fit into the base tier. This decline in Australian Government assistance for consumers contributes to concern about affordability of private health insurance."

It recommends the introduction of a "bespoke indexation rate" that would be linked to cost factors in the health sector rather than the consumer price index.

"For example, the new rate could match actual indexation of Commonwealth funding for public hospitals, which is capped at 6.5% a year from 1 July 2017."

The Members Health Fund Alliance also backed a change to stabilise the eroding value of the rebate. 

"Given that the rebate will soon dive under 25% for the first time, we are entering unchartered territory and there are real risks that unless there is decisive action by Government to stabilise the value of the Australian Government Rebate by placing a floor under it, of not less than 25%, private health insurance participation will continue to decline to the significant detriment of the public system and all Australia’s health consumers," it said.