Pressure to ease on private health insurance

20 October 2016

The Turnbull Government will reduce the cost of thousands of medical devices ranging from pacemakers and lenses to knees and hips by half-a-billion dollars to take pressure off private health insurance premiums for Australians.

Minister for Health Sussan Ley today announced reforms to regulations that have seen the cost of some medical devices inflated by thousands of dollars for private patients, which they pay for through higher premiums.

Ms Ley said the Turnbull Government’s action was good news for consumers and the onus was now squarely on private health insurers to pass on lower premium increases to their customers from next year. The cuts were foreshadowed in February when prosthesis reform was made a “priority” via the establishment of an industry working group compromising health insurers, device manufacturers, hospitals, clinicians and consumers.

“We are a Government that has consulted, listened and acted on prostheses to deliver balanced reforms to ensure we keep private health insurance affordable while maintaining full patient access to medical devices,” Ms Ley said when announcing the price reductions in October.

“Consumers made it clear in droves through our online survey that they don’t feel they are getting the best deal from their health funds.”

The Turnbull Government’s prostheses reforms include:

  • Reducing the cost of medical devices as set by the Prostheses List by 10 per cent for cardiac devices and intraocular lenses and 7.5 per cent for hip and knee replacements from 20 February 2017. This will reduce costs for insurers by $86 million in the first year, and total $500 million over the next six years.
  • Reconstituting the new Prostheses List Advisory Committee (PLAC) that will develop, consult and advise the Government on further changes to the prostheses listing arrangements.
  • Investigating a move towards applying a more robust and transparent price disclosure model of ongoing, sustainable reductions to the cost of medical devices through the new PLAC.
  • Faster access to new innovative medical device technologies through improved listing processes without compromising safety.
  • Considering a transparent way to reimburse hospitals for the costs of maintaining inventory of medical devices so that they are on hand when needed.

“Our prostheses reforms provide private health insurers with certainty over a reduction in their costs on medical devices to the tune of half-a-billion dollars over the next six years.

“We have taken action as promised and it’s now time for insurers to deliver on their promise to substantially lower premium increases for their customers next year.”

Price cuts welcomed

The Consumers Health Forum called the price reductions a welcome first step towards containing costs of private health insurance.

It is welcome that the Government has … initiated a reform agenda to make private health insurance affordable and better value for individuals and to deliver better outcomes for the health system as a whole.” says Leanne Wells, CEO of Consumers Health Forum.

“If these announced cuts lead to a lower level of premium increase in 2017 then consumers will benefit.”

The Medical Technology Association of Australia (MTAA) expressed disappointment with the government’s announcement , claiming that the cuts will have a seriously adverse impact on jobs and services provided by the industry.

“We’ve been, and remain, fully supportive of the Government’s efforts to achieve lasting and meaningful fact based reform of medical device benefits,” said Andrea Kunca, co-lead of the Medical Technology Association of Australia.

“But 70% of our members with products on the PL are Australian small-to-medium size companies and a cut of this size will mean job losses, reduced R&D and loss of manufacturing to overseas.

“It’s a decision to satisfy the PHI industry’s ever increasing voracious demands for unjustifiable premium increases with the premium round due to begin in November.

“And we expect the PHI industry will pass on every dollar of this cut to consumers through reduced premiums as this has been the reason for the cuts.”

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