Private health cover has become a mess and a joke

IN what other business would we accept price rises of up to 40 per cent in three years, asks Margaret Wenham. Our hybrid health system is a needlessly complex, unsolvable mess.

LAST year Health Minister Greg Hunt was out and about selling the “lowest in a decade” 4.8 per cent average rise to PHI premiums.

Mine went up by 6.8 per cent. This year he was spruiking 3.95 per cent and mine’s gone up 6.07 per cent. In fact, my premium has increased by 20.5 per cent in three years. The headline inflation rate is 1.9 per cent. My last pay rise was 1.25 per cent.

It could be worse. One helpful reader previously told me they’d switched insurers in 2015 due to annual double digit premium increases but that hadn’t helped and, all up, the couple’s premiums had gone up 38.77 per cent between 2014 and 2017. Last year they were notified their premium would be $4 shy of $6000.

He’s just touched base again to say they had some relief in August when the Howard government-imposed lifetime health cover penalty they’ve been paying for 10 years, which increased their premiums by a whopping 55 per cent — the maximum is a criminal 70 per cent — had finally been lifted. But now they’ve been told their premium will increase by 9.5 per cent this year.

Another reader who calculated he and his wife’s cover had increased 86.5 per cent over eight years has also just reported in again saying his premium on an “annual amount to annual amount” basis has gone up 7.7 per cent. But, then, strap in and see if you can work this out: as they also bank with their insurer, they’re offered a 4.4 per cent discount for payment by direct debit. However, if they pay the full annual amount upfront again (which they did last year for a discount) they’ll “forfeit” their direct debit discount “and the increase then over last year’s lump sum would be 9.9 per cent”.

Minister for Health Greg Hunt has previously promoted private health insurance premium rises as the “lowest in a decade”. (Pic: Mick Tsikas)

“And if you cannot follow all that then two glasses of Sav Blanc will help,” he went on, referring to my favourite tipple.

To which I say cheers and no surprises, then, that the number of people with private health insurance continues to slide with APRA’s last quarterly report showing, as at December 31, 45.6 per cent of the population had hospital cover, down 1.8 per cent since June 2015.

But both my correspondents lament not just the ridiculous premium hikes but also out-of-pocket expenses.

And herein lies one of the other irritating rubs associated with our hybrid health scheme — that we’re paying three times through relentlessly escalating private insurance, plus the Medicare levy — soon to hit 2.5 per cent of our gross income thanks to the Turnbull Government lifting the NDIS component of it to 1 per cent — plus gap payments.

The federal Health Department’s submission to a Senate committee inquiry last year into PHI affordability and out-of-pocket costs which reported in December says in 2015-16 those privately insured who accessed in-hospital treatment that year paid out $483 million more in excesses and co-payments.

But gaps for GP visits and specialist consultations are another source of out-of-pocket expenses. Yes GP bulk-billing rates are high but not all do it all the time and I’ve yet to meet a specialist who does, while some of them, as a study published in the Medical Journal of Australia last year indicated, charge so far over the odds as to be unconscionable which is something the profession must address.

But, gaps for GP visits and specialist consultations are another source of out-of-pocket expenses. Yes GP bulk-billing rates are high but not all do it all the time and I’ve yet to meet a specialist who does, while some of them, as a study published in the Medical Journal of Australia last year indicated, charge so far over the odds as to be unconscionable which is something the profession must address.

But, as I’ve written before, some sympathy should be reserved for medicos who charge more than the Medicare Benefits Schedule fee. Firstly because of the MBS rebate indexation freeze Labor stupidly imposed in 2013 and the Coalition Government stupidly kept. And, secondly, because the MBS is wildly out of date, including the fees for services and procedures.

It’s true the rebate freeze is now being lifted but incrementally and at snail’s pace. Positively glacial in its progress is the MBS Review set up in 2015 to sift through everything to ensure all the treatment and procedure items on it are current and best practice. But what this review is not doing, from what I can make out, is recalibrating the fees so they reflect a fair reality with the aim of reducing or eliminating out-of-pocket costs so people actually take out and use their private health insurance in private hospitals, rather than having it but going public to avoid gaps. Of course, for this to occur a rise in the Medicare levy — not increased since 1995 — would likely be required. But as both Labor and the Coalition have stupidly used the levy as a vehicle to raise NDIS funding, this would now be a tough sell.

Not being reviewed is whether the Howard government rebate, costing about $6 billion a year, has encouraged system milking by private hospital companies, insurers and some specialists; and whether the lifetime health penalties work as a disincentive.

And now there’s the Turnbull Government’s gold to basic bronze insurance category changes which risk destroying the community rating and risk equalisation of PHI such as they currently exist, and will doubtlessly result in many of us paying even higher premiums. Meanwhile, some insurers are quietly suturing us into cover with only hospitals and specialists with whom they’ve stitched up contracts.

As it stands it’s difficult to believe sound reform, developed free from the interference of political stupidity, the shackles of liberal economic orthodoxy and the influence of vested commercial interests, is ever going to be achievable.