Private health insurance is integral to the success of Australia’s health system. More than 13 million Australians have some form of private health insurance. Recent research shows that 80 per cent of health fund members value their PHI because it gives them security, confidence they can access medical treatment when and where they need it.
With two-thirds of non-emergency surgery and chemotherapy, as well as 80% of mental health admissions taking place in the private sector, private health insurance has been an essential component of Australia’s health system for decades – providing prompt access to high quality health care and taking the pressure off the public hospital waiting lists.
Health inflation and increased utilisation of all health services are however forcing premiums up at rates exceeding household incomes, putting the sector under increasing strain. Almost half of all Australians with private health insurance have an annual income of less than $50,000. These people aren’t wealthy but they want to take responsibility for their own health care and by doing so, they reduce pressure on public hospital waiting lists.
The issues of affordability, accessibility and quality in healthcare, must be addressed by the Federal Government and stakeholders as a matter of urgency. Introducing the reforms needed to deliver affordable and better healthcare is not an easy task and will require some brave decisions to keep the system economically sustainable.
Government has all the information it needs
The Government can act now to address the affordability of private health cover. One of the most obvious reforms is to deflate regulated medical device benefits in line with real market prices. Australian health fund members are paying the highest prices in the world for medical devices, at up to 2-5 times the prices charged for the same device in the same hospitals to public patients, and in equivalent countries around the world. This clearly puts pressure on premiums and reduces affordability of PHI.
The Government has all the information it needs to fast track this reform and health funds have given a commitment to pass on savings to members through a reduction in premium increases. Health funds are also making a considerable investment in work to help consumers navigate a complex system, including making it easier to choose health fund products based on cost and need. Part of this involves work with health professionals to help consumers choose specialist services based on transparency of out-of-pocket costs.
Healthcare reform is not an easy undertaking and in the current political environment there will be increasing pressure from stakeholders. There will be winners and losers, but it is certainly true that private health insurance eases pressure on the public hospital system, and ultimately benefits all Australians.
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