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24 April 2017
A proposal for the Federal Government to pay 40% of the cost of a hospital episode and scrap the private health insurance rebate has been slammed by HIRMAA.
In a submission to the Government’s industry review, the peak body for community health funds says this would turn insurance into a “marginal product”.
“Policy innovations should complement private health insurance, not undermine or destroy it,” the submission says.
“There are those who do not believe in the private health sector and private health insurance.
“To listen to those calls would be a mistake because they fail to understand the contribution the private health sector actually makes to the sustainability of the public system.”
Under the Government’s proposal, the 40% benefit would be determined using the “national efficient price” for services in public and private settings.
The balance of funding would be provided by state governments, regardless of the type of hospital.
HIRMAA says without comprehensive modelling and consultation with the insurance industry, there could be “dire and unintended consequences”.
“Scrapping the private health rebate would exacerbate existing premium affordability and exclusionary coverage, which the Government has identified as its top concerns about private health insurance,” the submission says.
“If private health insurance becomes marginal in hospital and related treatment services, the industry’s future would be as ancillary insurers rather than as comprehensive health insurers.”
The submission warns the move would render private health insurance unsustainable.
“We do not believe this is the Government’s intention.”
Another consequence would be the end of the cross-subsidy between younger, healthier groups of policyholders and high-claiming groups.
“If only people in poor health choose to remain insured, the required premium rates would become unaffordable. The resulting spiral of increasing premiums followed by the lapsing of relatively healthy policyholders would push additional costs onto public hospitals.”
HIRMAA says this happened in the early 1990s, when national coverage dropped to about 30% and it took the rebate to turn around the situation.
The association is also scathing on the lack of detail in the proposal, and the rushed consultation.
“Given the scale and potential consequences of the proposal, industry expects the Department of Health to provide much more detailed information to enable industry to form a considered view and come to an informed position. That detail has not been forthcoming to date.”
HIRMAA has called for the proposal to be explored at federal and state levels before any implementation.
“HIRMAA urges the [Federal] Government to investigate thoroughly how this payment model will address glaring concerns over health inflation pressures, listen to the private healthcare sector and not just the pleading of state governments.”
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