Pre­mium re­bates for the young, al­ter­na­tive iv ve ther­a­pies out, bet­ter deal for the bush


Young peo­ple will be of­fered fi­nan­cial in­cen­tives to take out health in­sur­ance poli­cies they are less likely to make claims on, pro­vid­ing in­sur­ers with ex­tra rev­enue as they try to limit pre­mium rises that have al­ready led thou­sands of mem­bers to quit.

Higher ex­cess lev­els will also be avail­able to help mod­er­ate pre­mium lev­els, after the fed­eral gov­ern­ment agreed to pro­vide ex­tra flex­i­bil­ity de­spite con­cerns higher-in­come earn­ers would take out front-end de­ductibles just to avoid the Medi­care Levy sur­charge.

A se­ries of other changes — in­clud­ing, for the first time, added ben­e­fits for re­gional mem­bers need­ing city hos­pi­tal treat­ment — will also seek to im­prove the value propo­si­tion amid spec­u­la­tion pre­mium in­creases will be kept be­low 4 per cent next year.

In the big­gest in­sur­ance re­form pack­age in al­most two decades, Health Min­is­ter Greg Hunt has of­fered a so­lu­tion to prob­lems that were con­sid­ered by his pre­de­ces­sors Sus­san Ley and Peter Dut­ton, and the for­mer La­bor gov­ern­ment. As ex­pected, hos­pi­tal poli­cies will be cat­e­gorised into gold, sil­ver, bronze and ba­sic bronze from April 2019 to help con­sumers com­pare poli­cies. De­spite be­ing on the agenda for months, the min­i­mum re­quire­ments for each cat­e­gory have still not been fi­nalised.

Amid the age­ing pop­u­la­tion, in­sur­ers will en­tice cus­tomers aged 18-29 with pre­mium dis­counts of up to 2 per cent for each year they are aged un­der 30, to a max­i­mum of 10 per cent. This is sep­a­rate to the Life­time Health Cover penal­ties that ap­ply to those who de­lay tak­ing out in­sur­ance un­til they are older, and the new in­cen­tives will be phased out by age 40.

By mir­ror­ing Life­time Health Cover, the gov­ern­ment has sought to avoid the charge that the new in­cen­tives un­der­mine com­mu­nity rat­ing and the prin­ci­ple that mem­bers be charged the same re­gard­less of health sta­tus.

The in­cen­tives also al­low the gov­ern­ment to take ac­tion over un­proven nat­u­ral ther­a­pies, which health funds in­sisted were vi­tal to at­tract­ing and re­tain­ing younger mem­bers.

From April 2019, mem­bers will no longer be cov­ered for 16 of the 17 nat­u­ral ther­a­pies that an ex­pert review in 2014-15 found lit­tle ev­i­dence to sup­port. Mas­sage, for rea­sons that were un­clear yes­ter­day, will still qual­ify for ben­e­fits. To help ad­dress the chal­lenge of men­tal ill­ness, wait­ing pe­ri­ods for men­tal health cover will be able to be lifted once per pol­icy-holder when a hos­pi­tal visit is re­quired, and ben­e­fit lim­i­ta­tion pe­ri­ods also removed, from next April.

For the first time, after Ms Ley and Na­tion­als deputy leader Fiona Nash called for a bet­ter deal for the bush, in­sur­ers will be able to of­fer travel and ac­com­mo­da­tion ben­e­fits un­der hos­pi­tal cover to help peo­ple in re­gional ar­eas who do not have a lo­cal pri­vate hos­pi­tal.

More than $1 bil­lion in pros­the­ses cuts be­tween 2018 and 2021 will help in­sur­ers lower costs and re­duce pres­sure on pre­mi­ums, with manufacturers given the trade-off of re­duced red tape and ac­cess to grants.

The Pri­vate Health In­sur­ance Om­buds­man will have the power to in­spect and au­dit health funds, with a fo­cus on ver­i­fy­ing cus­tomer ac­tiv­ity records and ad­dress­ing com­plaints in re­la­tion to con­trac­tual ar­range­ments.

There will be a new list of stan­dard clin­i­cal def­i­ni­tions from 2019 to make health­care eas­ier to un­der­stand, while an ex­pert com­mit­tee will look at in­creas­ing trans­parency for out-of-pocket costs, and a sep­a­rate com­mit­tee will con­sider low-value ser­vices in men­tal health and re­ha­bil­i­ta­tion.

“We know that every dol­lar mat­ters to Aus­tralian fam­i­lies and these re­forms will get bet­ter value for fam­i­lies and make poli­cies eas­ier to un­der­stand,” Mr Hunt said yes­ter­day. The min­is­ter will seek to ad­dress the is­sue of public hos­pi­tals billing pa­tients’ in­sur­ers in up­com­ing fund­ing ne­go­ti­a­tions with the states.

Aus­tralia’s health in­sur­ers have backed the most com­pre­hen­sive re­forms to hit the in­dus­try in al­most 20 years and promised to de­liver lower pre­mium in­creases after win­ning more than $1 bil­lion in sav­ings on the cost of med­i­cal de­vices.

Health Min­is­ter Greg Hunt will to­day an­nounce a list of pri­vate health in­sur­ance re­forms, in­clud­ing cat­e­goris­ing poli­cies as Gold, Sil­ver, Bronze and Ba­sic Bronze, a dis­count for young peo­ple and more power for the Pri­vate Health In­sur­ance Om­buds­man.

The key re­form that will im­me­di­ately trans­late to lower pre­mi­ums next year is a mea­sure to cut prices on the pros­the­ses list, which sets the price in­sur­ers must pay for med­i­cal de­vices. The in­sur­ance in­dus­try has long ar­gued they are over­charged, com­pared to Aus­tralia’s public sys­tem and com­pa­ra­ble coun­tries.

The pros­the­ses re­form is said to rep­re­sent a $1.5bn sav­ing to the pri­vate in­sur­ance in­dus­try over the next four years. That mea­sure in­cluded a four-year agree­ment be­tween the gov­ern­ment and the Med­i­cal Tech­nol­ogy As­so­ci­a­tion of Aus­tralia.

Ian Burgess, chief ex­ec­u­tive of the MTAA, said the deal ended a long pe­riod of un­cer­tainty for the in­dus­try but it came at a price.

“These cuts are sig­nif­i­cant and will im­pact on jobs and in­vest­ment in the in­dus­try. How­ever, the MTAA mem­ber­ship took the view the agree­ment was in the best in­ter­ests of the in­dus­try and ul­ti­mately pa­tients,” Mr Burgess said.

NIB chief ex­ec­u­tive Mark Fitzgib­bon said the price cuts to the pros­the­ses list would drive down the av­er­age an­nual pre­mium in­crease to the “low end of 4 per cent”. Pre­mi­ums rose by an av­er­age 4.84 per cent this year, the low­est in a decade.

Mr Fitzgib­bon said con­sumers in pri­vate hos­pi­tals had been pay­ing “wildly in­flated” prices for med­i­cal de­vices.

“It’s bor­der­ing on a scan­dal and all credit to min­is­ter Hunt in tak­ing on the self-in­ter­ests that have per­pet­u­ated the mad­ness,” he said.

Matthew Koce, chief ex­ec­u­tive of in­dus­try body Hir­maa, said the $188 mil­lion in sav­ings to be re­alised in the first year of the pros­the­ses price cuts equated to an av­er­age sav­ing of just over $34 per pol­icy.

“All our funds have pro­vided an iron-clad com­mit­ment to pass on every sin­gle dol­lar of sav­ings to con­sumers once they have been re­alised,” he said.

HBF chief ex­ec­u­tive John Van Der Wie­len said the cuts to pros­the­ses prices would save the in­surer about $15m each year.

“That is sig­nif­i­cant but set against the $1.5bn in to­tal health claims we paid mem­bers last year, it’s not a game-changer,” he said.

“The goal must be to bring the prices in­sur­ers are charged for pros­the­ses down to par­ity with the public sec­tor.”

Med­ibank chief ex­ec­u­tive Craig Drum­mond said the re­form pack­age was es­sen­tial to

keep pre­mi­ums af­ford­able. “In an en­vi­ron­ment where the cost of health­care con­tin­ues to rise, re­forms like this are para­mount to ad­dress­ing the is­sue of af­ford­abil­ity,” he said.

Ger­ard Fog­a­rty, chief ex­ec­u­tive of De­fence Health, ar­gued that while the re­forms were a start, they were far from suf­fi­cient to re­sult in im­me­di­ate, sig­nif­i­cant re­duc­tions in pre­mi­ums.

“Form­ing com­mit­tees to look into mat­ters like out-of-pocket ex­penses is just hand-wring­ing. The gov­ern­ment knows the is­sues. It sim­ply needs to act,” he said.

The in­sur­ers agreed that the new dis­count for young peo­ple, which will re­duce pre­mi­ums by up to 2 per cent for each year an adult is aged un­der 30, was a key vic­tory.

Pri­vate Health­care Aus­tralia chief ex­ec­u­tive Rachel David said the re­verse Life­time Health Cover pol­icy would be a ma­jor fac­tor in ad­dress­ing mem­ber­ship rates and im­prov­ing par­tic­i­pa­tion and af­ford­abil­ity.

Bupa’s Aus­tralian health in­sur­ance boss Dwayne Crom­bie said it was a com­pre­hen­sive pack­age of re­forms, de­vel­oped in close con­sul­ta­tion with all stake­hold­ers.

“It is an im­por­tant first step and we look for­ward to con­tin­u­ing to work with the min­is­ter on mea­sures to in­crease par­tic­i­pa­tion in pri­vate health in­sur­ance, make it sim­pler and more trans­par­ent,” he said.

Sheena Jack, chief ex­ec­u­tive of HCF, said there was no ques­tion pri­vate health in­sur­ance had been in need of re­form to en­sure the in­dus­try was fo­cused on the best out­comes for pa­tients.

“Em­pow­ered con­sumers are a win for ev­ery­one. Con­sumers with the right poli­cies will be bet­ter cov­ered and have their ex­pec­ta­tions met when they come to claim,” she said.

How The Aus­tralian broke the story on Jan­uary 2

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