The AMA Repeat Prescription for Private Health Insurance

In October 2020 the AMA published our Prescription for Private Health Insurance. At that time private health insurance (PHI) was in trouble and, after extensive analysis, we developed a list of policy prescriptions to improve the health of the system. Each proposal had 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.

After 5 years of declining PHI membership, there have now been 10 quarters or growing membership so that there are 513,618 more people with private hospital insurance than when the AMA released our report in October 2020. However, the trend is still for older people to take out insurance at a higher rate than younger people, with 40% of the insured population over 60 and only 6% aged 20-39 and 24% aged 40-59 (between Sept 2020 and Dec 2022).

Despite this upturn, our private health system is still not well. While private health insurers have seen significant increases in their profit margins, private hospitals are entering their fourth year of reduced capacity (whether this has resulted from COVID 19 or now workforce shortages) and therefore reduced profitability.

These recent swings in profitability demonstrate that management of Australia’s private health system is failing. Failing healthcare providers, failing governments and failing our patients.

Reform to our whole system must continue – Australia’s private health system is no longer fit for purpose, it does not suit the times or take into account the needs of today, let alone the pressures and changes of tomorrow. Yet now is when we need our private health system more than we have ever done before. Our public hospitals are overflowing, and patients are waiting years on the hidden waiting list to see be seen in outpatient clinics before they can even be put on a surgery waiting list.

Our private health system continues to provide access to specialists, access to treatment, access to surgery. This is the reason so many Australians have chosen to invest in PHI even when cost of living pressures are higher than they have been for many years.

Australians spend a lot of money on PHI, but many do not see the value. There are immediate changes we can make to ensure that it delivers value for consumers in terms of meeting a person’s health needs, and to meet the needs of an ageing population with increasing chronic disease and multimorbidity. The planning and innovation to create such a system must take place now – it must be evidence based, wholistic and purposefully designed.

We are not doing this work and we do not have the appropriate mechanisms to support this work to be done. Australia needs an overarching body to bring the sector together to allow all stakeholders to work better together support enduring reforms. Now is the time for Government to invest in this capacity through the establishment of a Private Health Insurance Authority. Such an authority needs to be patient centred and independent – so it can provide evidence-based advice and recommendations to government about future directions for the sector.

Now is the time for the Government to step up and design an Australian health system which integrates our public and private sectors and provides all Australians with access to high quality health services now and into the future.

As part of the AMA Repeat Prescription, we are again outlining a call for action with renewed proposals. Like our first Prescription each proposal has one of two ultimate goals – to either make private health insurance more affordable for those who currently cannot afford it, to improve its value proposition for consumers, and the wider health system, or to position our private health system into the future.