Incentives key to private health insurance uptake

Want more people to take out private health insurance? Offer effective incentives, says the Australian Private Hospitals Association (APHA).

This is one of the key messages in APHA’s Federal Budget Submission, which reports that effective incentives will promote private health insurance uptake and mean more Australians can access the private hospital care they value.

APHA CEO Michael Roff called on the federal government to restore the Private Health Insurance Rebate to 30% for Australians in the lowest income tier.

“Low-income Australian households face a double whammy of increased premiums and reduced rebates when it comes to private health insurance,” he said.

“Every year the value of their rebate goes down, while their private health premiums increase.

“For example, in 2019 a high-income earner who did not receive the rebate would have experienced a premium increase of 3.25%. However, low-income earners would have experienced a real premium increase of 3.74%,” Roff said.

“This doesn’t pass the fairness test, nor does it achieve the aim of the rebate — to incentivise Australians to take up private health insurance.”

Roff said APHA is calling for the restoration of the rebate to 2013–14 levels for low-income earners. This would return the rebate to 30% for those under 65, 35% for those aged 65–69 and 40% for those aged 70 and over.

“This will reduce premiums for these households by between 2.02% and 3.67% and cost about $1.4 billion in 2020–21,” he said.

The submission also makes recommendations for savings, including curbing claims for private health insurance in public hospitals.

“This practice is punishing patients who can’t afford private health insurance. They suffer with deteriorating health on elective surgery waiting lists as public hospitals push the privately insured ahead of them. Add to that, it is also a perversion of Medicare — care based on clinical need, not ability to pay,” Roff said.

“If this practice stopped, private health insurance premiums would drop by 6%.”

The submission also calls for a default benefit for alternatives to inpatient treatments including day, community-based, home-based programs for rehabilitation, mental health and palliative care. Not only would this provide patients with more options for accessing care, it would also lower the overall cost to the health system.

“Private hospitals have developed a range of innovative programs that would reduce costs and improve outcomes for patients. These include services like chemotherapy in the home, ambulatory cardiac rehabilitation, rehabilitation in the home and hospital in the home as part of an early discharge service,” Roff said.

“However, the majority of health insurers refuse to financially support such programs provided by hospitals. Instead, they pay for services provided by themselves and a small number of community providers and direct their members to these services.

“Providing default benefits for these services would allow hospitals to expand and integrate services across the continuum of care. This would increase patient choice and reduce the risk of avoidable readmission,” he said.

The APHA submission also calls for:

• doubling the Medicare Levy Surcharge to properly incentivise high-income Australians to take up private health insurance and relieve pressure on the public system
• increasing remuneration through the Pharmaceutical Benefits Scheme for hospital-based pharmacy
• upgrading IT software to relieve the administrative burden of private health insurance reforms
• increasing clinical placement funding for medical, nursing and allied health professional graduates
• reducing the cost and complexity of skilled migration arrangements.
   

To view the full APHA Federal Budget Submission, click here.

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