Private health insurance is in trouble. The AMA has developed a list of policy prescriptions to improve the health of the system. Each proposal has one of two ultimate goals – to either make private health insurance more affordable for those who currently cannot afford it, or to improve its value proposition for consumers, and the wider health system. Download the AMA's Prescription for Private Health Insurance.
Even before the impact of the COVID-19 pandemic has been fully realised, private health insurance was in trouble. Membership has fallen continuously for the last 19 quarters or almost 5 years, and none of the Government’s recent reforms have reversed this decline.
Younger people continue to drop their private hospital insurance, while people over 65 years are taking it up in increasing numbers, further jeopardising the stability of the system.
Demographic shifts have created a trend which places upward pressure on premiums for those who maintain their insurance, leading the Australian Prudential Regulation Authority to state that private health insurance is in a ‘stable but serious condition, with that stability under threat’.
The AMA is concerned that the likely financial impact resulting from the COVID-19 pandemic including unemployment, underemployment and a slowing economy, will result in even more young people giving up their insurance, increasing pressure on an already unstable system.
To stem the exodus of policy holders, we need to increase the value and decrease the pressure on premiums, at the same time.
The policy settings to support private health insurance in Australia are not set and forget. Demographics, wages, chronic disease, technology and health care all change, and we need to respond to these changes to ensure Australia’s private health system remains stable.
To fix the private health system careful reform will be required both in the short and long term. Utilising publicly available data the AMA has developed a list of policy prescriptions to improve the health of the system.
Some of these policy proposals will require further modelling and development by Government. But some of these steps can be undertaken by the Government in the forthcoming October budget.
Each proposal has one of two ultimate goals – to either make private health insurance more affordable for those who currently cannot afford it, or to improve its value proposition for consumers, and the wider health system.