AMA calls for urgent private health insurance reform

The AMA is calling for urgent reforms to private health insurance to address threats to its sustainability in the face of soaring private health insurance management costs and fewer young people joining.

The AMA this week released its Repeat Prescription for Private Health Insurance, and its 2023 federal budget submission on private health, which calls for long-overdue reforms to be implemented to ensure Australians get value for money from their insurers and the system remains sustainable. 

AMA President Professor Steve Robson said, “We need to have more money flowing to improving patient outcomes and less going into management expenses of insurers, which have increased by more than 16 per cent, while expenditure on medical services have gone backwards over the past three years.

“That’s why the AMA would like to see a minimum payout with 90 per cent of every premium dollar paid returned to patients.”

The AMA has called for the restoration of the PHI rebate for targeted groups to make private health hospital insurance affordable for younger Australians and those in the workplace on lower incomes.

The rebate has eroded over time after the government indexed it to the Consumer Price Index (CPI) instead of premium growth since 2014. The value of the average rebate has fallen from 30 per cent in 2013 to 24.6 per cent in 2021.

The Herald Sun reported that health fund members could save around $400 a year if the subsidy for private health insurance was lifted from 24 to 30 per cent in the May budget.

It said the AMA’s budget submission had calculated that it would increase the number of younger people with insurance at a cost to taxpayers of $5.3 billion over four years.

The AMA is also continuing its call for an independent Private Health System Authority to drive reform and oversee the private health system.  
  
Professor Robson said that at the moment no one is looking at the bigger regulatory picture to gauge the impact of ad hoc changes or balance the interests and needs of day hospitals, private hospitals, private health insurers, medical device manufacturers, doctors and, most importantly, patients.

“A Private Health System Authority would ensure a cohesive regulatory model and safeguard patient choice. If we truly want reform, if we are committed to introducing new models of care, and if we are going to make insurance affordable in an era of cost-of-living increases, we are going to need to come together as an industry — with government — to make that change. A Private Health System Authority can be the mechanism to make that happen.”