Health Funds, Public, Invited to Discuss Health Insurance Reform

The Federal Government has called for national talks on health insurance, and has called health funds and members of the public to make comments on the state of health insurance in Australia.

Citing significant challenges in maintaining the sustainability of our health system, Federal Health Minister Sussan Ley has flagged the government’s plan to hold health insurance roundtable discussions in the coming weeks, with both health funds and public invited to comment. Former competition watchdog chair Graeme Samuels will work with the Health Department to provide technical expertise.

Individuals will also be able to submit online comments.

Government’s Statement on Health Reform

Commenting at the National Press Club, Ms Ley said greater efficiencies are needed and that the patient should be the centre of everything.

“We are becoming rather a “scans on” profession rather than a “hands on” profession. Patients clutter the Emergency Department and they have an excessive amount of investigations because nobody takes the time to take a history or to do a physical examination,” said Ms Ley.

“At a simple level, consider the example of hip replacements. Thirty years ago they were performed to keep patients out of residential aged care. Now they’re done to keep you on the tennis court.

“As such, our health system now seems to be suffering from an identity crisis – unsure whether its focus is on making a person well or improving their wellbeing.

“And like one in two Australians, our health system is also struggling under the added burden of chronic disease. No longer are we dealing with heart and stroke issues as just episodic incidents. Instead they are now on-going clinical management issues; or in other words ‘chronic conditions’.”

Health insurance industry response


nib health funds limited (nib) welcomed the Government’s announcement that it will launch a public consultation and roundtable discussions, Chief Executive Officer, Mr Mark Fitzgibbon saying that Australia needs private health insurance to play an increased role in the funding and facilitation of our healthcare spending.

“As a nation we’re now spending more than $150 billion a year on health and taxpayers are funding around 68% of the total cost,” Mr Fitzgibbon said.

“But it’s a system that was built in a time when there were about seven working taxpayers for every retired person to fund the spending. Today there are more like five working tax payers to every retiree and by 2040 there will be just three. Unavoidably, and just as we’ve found with pensions and superannuation, we need funding mechanisms to help people take greater individual responsibility for their lifetime healthcare costs,” Mr Fitzgibbon added.

According to Mark Fitzgibbon, the initiatives he hopes to see come out of this upcoming roundtable are:

  • Expanded role for PHI in covering GP doctors outside of hospital.
  • New pricing regime for prosthetic devices.
  • Being able to risk rate for behaviour such as smoking (as distinct from uncontrollable factors such as gender or age).
  • Premium price surveillance rather than control.
  • Reform of risk equalisation.


Medibank also welcomed the government announcement and flagged its intention of being an active contributor to it.

“Private health insurance is a critical part of Australia’s health system, providing consumers with greater choice in how their healthcare is delivered and reducing demand on the public system. Yet private healthcare is under stress as costs continue rise, pushing premiums higher and causing consumers to react by reducing their cover,” said Medibank Managing Director and CEO, George Savvides.

“It is important this review not simply focus on private health insurers and how they are regulated but look at the wider health sector as well. This is critical as addressing the challenge of private health insurance affordability can only be done by taking a holistic view of the system and the cost pressures within it that drive premium growth.”

ACCC Health Insurance Industry report

A recent report on the private health insurance industry, released by the Australian Competition and Consumer Commission (ACCC) highlighted concerns about the impact of complex information on consumers and the market. In particular, the increasing challenge of choosing a policy.

“The ACCC is concerned that the complexity of private health insurance policies can affect consumers’ ability to make informed decisions about the policy that best suits their need,” said ACCC Deputy Chair Delia Rickard said.

“Consumers may encounter significant difficulty in determining what a procedure will cost and how the relationship between their insurer and the relevant practitioner or hospital will affect this cost. It is in the interests of both consumers and industry to be as clear and transparent as possible so that consumers who are purchasing insurance can make the best decisions about their level of coverage.”

In particular the ACCC noted:

  • Market failures in the private health insurance industry which reduce consumers’ ability to compare policies and make informed choices about their future medical needs.
  • Existing regulatory settings can change consumers’ incentives in purchasing health insurance. As insurers respond to market demands for affordable policies there are greater risks of unexpected out-of-pocket costs for consumers.
  • Current practices by some insurers are at risk of breaching the consumer laws.

As such, Minister Ley’s roundtable discussion initiative would appear to be right on the money. Reducing the “norm” of complexity and impersonal procedures in the public space should have a welcome flow though effect to private health insurance funds as well. We will watch the outcomes of the discussions with interest.

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