Private health insurance premiums to stay low but undermine health system

Health Minister Mark Butler’s decision to carve out private health insurers from funding medical devices will keep premiums down at the expense of the broader health system, an expert says.

Health Minister Mark Butler. Picture: NCA NewsWire / David Beach​

Health Minister Mark Butler’s decision to carve out private health insurers from funding medical devices will keep premiums down at the expense of the broader health system, says a health expert.

Former deputy chief medical officer Nick Coatsworth said private health insurance premiums would remain low under reforms to the prosthesis list but patients or hospitals would inevitably have to recover the costs for medical devices.

Dr Coatsworth, who is Australian Patients Association’s health reform ambassador, said the policy change could undermine the broader health system.

He said the government should intervene to regulate the price of devices.

“At the end of the day, device cost and who foots the bill is the basis of this issue between our insurers and our hospital providers,” Dr Coatsworth said.

“Anything that stops a cost from being borne by the insurer will keep premiums down but then someone has to pay for it.

“It doesn’t solve the problem for the health system; sure, it helps the viability of insurance companies but it undermines the broader health system.”

The warnings come after The Australian revealed Mr Butler had secretly backtracked on his commitment to force private health insurers to pay for essential medical devices used in surgeries. The about-face sparked warnings from private hospital providers which claimed they would be forced to cut services and increase fees.

The nation’s peak doctor lobby also raised concerns that Labor’s reforms to the prostheses list had delivered “significant savings” to private health insurers while leaving patients adversely impacted.

Private health insurers say Labor’s new reforms will mean cheaper premiums and ease cost-of-living pressures for 14.5 million Australians with private health insurance.

Private Health Australia chief executive Rachel David said hospitals were not the target of new reforms but rather multinational device companies that had “been exploiting inflated ­prices in the Australian market”.

The peak body, which has been advocating for this reform for years, said Labor was right to crack down on the “exorbitant” prices of medical devices.

“The government’s medical device funding reform will mean cheaper premiums and ease cost of living pressure for 14.5 million Australians with private health insurance,” Ms David said.

“Medical device companies have been charging too much for these consumable items and profiting at the expense of consumers. We need to keep the health system affordable.”

Members Health Fund Alliance, representing 25 smaller health funds, said the cost of medical devices in private hospitals was up to 85 per cent more than in public hospitals.

The body’s chief executive, Matthew Koce, said the move would help put downward pressure on insurance premiums.

Medical Technology Association of Australia chief executive Ian Burgess said he was “deeply concerned” about the lack of “consultation, justification or rationale from the department” prior to Mr Butler’s decision.