Radical reforms proposed for private health insurance
Greedy doctors and inefficient private hospitals are adding billions a year to health insurance costs. Here’s how a radical overhaul could save customers big bucks. HOW YOU COULD SAVE
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Health fund premiums could be slashed by $400 a year under radical policy changes that would see patients get a single bill combining hospital and doctors costs with no out-of-pocket expenses.
Former health department chief Stephen Duckett has found greedy doctors, inefficient private hospitals and the provision of unnecessary operations are adding $2 billion a year to health insurance costs.
He has proposed a radical overhaul within the next two years that would see the independent Hospital Pricing Authority that sets prices for public hospital procedures do the same for private hospitals.
Doctor Duckett made the findings in his report Saving Private Health which was commissioned by the Grattan Institute, published on Monday night.
Patients undergoing surgery would no longer receive multiple bills from specialists, anaesthetists, assistant surgeons, pathologists and for medicine and hospital charges under the proposed changes.
Instead private hospitals would be in charge of negotiating with providers and have to bundle all the bills together and provide patients with surgery with no out of pocket expenses.
“Private health insurance will continue its death spiral unless excessive private hospital costs and specialist bills are reined in,” the report says.
Health funds earlier this month submitted their applications for the latest round of above inflation premium rises as new data shows private health insurance membership continues to slide as it becomes unaffordable.
Health Minister Greg Hunt has refused the 3.5 per cent premium rises the industry asked for and told them to come back with a lower rise as he faces pressure to introduce further reforms.
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The Grattan report finds a small minority of “greedy” doctors who bill their patients at more than twice Medicare fee are the reason health fund members face huge medical gap fees not covered by their health fund.
One quarter of cancer patients had out-of-pocket costs of more than $17,000 and the median direct medical out-of-pocket cost for women with private insurance was 10 times more than the out-of-pocket cost for those without it, the report said.
The report also found:
• Health fund members could save $350 million a year on their premiums if high charging doctors were limited to charging just 50 per cent above the Medicare rebate;
• Private hospitals are less efficient than public hospitals - their patients stay 9 per cent longer in a bed than public hospital patients with similar conditions;
• Making private hospitals more efficient would reduce health fund costs by about $1 billion each year and private health insurance premiums by about 5 per cent;
• If private health insurers no longer paid for care that is of no or low value to patients they could save a further $1.5 billion a year.
“In total this report identifies savings of about $2 billion each year,” the report said.
“Capturing those savings and passing them on the patients in the form of a 7-to-10 per cent reduction in insurance premiums could save private health care in Australia.”
Australian Private Hospitals Association chief Michael Roff said while the idea of single bill was superficially attractive the report did not explain how it could be achieved and why doctors would agree to it.
Private Healthcare Australia chief Dr Rachel David welcomed the idea of an independent body setting fees for hospital care and the introduction of a single bill.
However, she said it might be hard to include the doctors’ bills in a single bill because under the Australian Constitution the government cannot overtly control the fees doctors charge.
Australian Medical Association president Dr Tony Bartone said in private health, what matters in most cases was not medical fees but the insurer rebate.
“All private health insurers pay more than the MBS, and some more than double the MBS for some services, currently. They do so because they recognise that the 5 year MBS freeze, and decades of under indexation and lack of policy innovation have taken their toll,” he said.
Originally published as Radical reforms proposed for private health insurance