Health in­sur­ers fear ALP re­form blowout

The Weekend Australian - - THE NATION - SARAH-JANE TASKER

Aus­tralian health in­sur­ers have warned Bill Shorten that if he fails to in­tro­duce re­forms to sup­port his plan to cap premium in­creases at 2 per cent, the pol­icy will even­tu­ally push the cost of in­sur­ance sig­nif­i­cantly higher.

Lead­ers in the health in­sur­ance in­dus­try told The Week­end Aus­tralian that while La­bor’s prom­ise to cap health in­sur­ance premium in­creases at 2 per cent for the first two years of a La­bor gov­ern­ment had forced de­bate on the af­ford­abil­ity is­sue, it lacked de­tail and could sig­nif­i­cantly hurt the sec­tor.

“What is the de­tail of the 2 per cent pol­icy that achieves com­pet­i­tive neu­tral­ity and does not desta­bilise a sec­tor that pays for twothirds of non-emer­gency sur­gi­cal pro­ce­dures?” said Matt Walsh, the chief ex­ec­u­tive of Aus­tralian Unity.

Mr Walsh added that should La­bor win gov­ern­ment, a Pro­duc­tiv­ity Com­mis­sion re­view into the sec­tor — al­ready pro­posed by the Op­po­si­tion Leader — should be done be­fore the 2 per cent pol­icy was in­tro­duced.

“There are two elec­tion cy­cles to think about be­cause what hap­pens at the elec­tion af­ter the 2019 one if the health­care sys­tem is be­ing desta­bilised be­cause we haven’t im­ple­mented sys­temic change but just pulled one lever (the 2 per cent cap).”

Rachel David, chief ex­ec­u­tive of Pri­vate Health­care Aus­tralia, warned that if the 2 per cent pol­icy was in­tro­duced with­out ad­dress­ing the un­der­ly­ing cost pres­sures in the sys­tem, an­nual premium in­creases could push into dou­ble dig­its once the cap was re­moved. “There could be some huge blowout in the end, un­less they have done some­thing tan­gi­ble to bend that cost and value curve that un­der­lies it,” Ms David said.

HBF’s chief ex­ec­u­tive John Van Der Wie­len, who pre­vi­ously worked in fi­nan­cial ser­vices, echoed the con­cerns.

He said with­out re­forms, the blunt mea­sure of the 2 per cent pol­icy meant that rates would have to be “jacked” up af­ter the first two years of a La­bor gov­ern­ment.

“If re­forms come in some time dur­ing the 2 per cent for two years, then com­ing out of that pol­icy premium in­creases might nor­malise back to 3 or 4 per cent, de­pend­ing on the re­form,” he said.

Mr Van Der Wie­len added that though he did not be­lieve the 2 per cent blunt mea­sure worked, it was a cat­a­lyst for the en­tire pri­vate health­care in­dus­try to en­gage on mea­sures to ad­dress cost is­sues.

By­ron Gre­gory, chief ex­ec­u­tive of South Aus­tralia-based Health Part­ners, said if premium in­creases were capped at 2 per cent but health­care costs were go­ing up at 5 per cent, then the “pain” would be passed on to those that pro­vided the care. “You will start to see a more ag­gres­sive change (from in­sur­ers) in terms of keep­ing peo­ple out of hos­pi­tal and get­ting peo­ple treated in a lower-cost set­ting,” Mr Gre­gory said.

The health in­sur­ance in­dus­try body has pre­pared a list of pro­posed re­forms for the next gov­ern­ment, which it said could re­duce health­care cost in­fla­tion to 2 per cent to 3 per cent an­nu­ally by 2030, sig­nif­i­cantly re­duc­ing pres­sures on health in­sur­ance pre­mi­ums.

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