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The Australian private health insurance (PHI) industry is no stranger to the topic of affordability. But with rates of participation declining for the first time since the introduction of Life Time Health Cover loading, the Medicare Levy Surcharge, and 30 percent Rebate some 19 years ago, the issue is resurfacing.
Though participation rates remain generally high – with around half of the national population owning some form of private health cover – the declining trend in uptake among younger consumers could have serious, long term consequences for the industry. Ultimately, this will put the sustainability of Community Rating under increased strain, warns Matthew Koce, CEO of the Members Health Fund Alliance.
“Within a community-rated system – and against the pressure of a rapidly ageing Baby Boomer population – efforts to keep premiums affordable presents a significant challenge for policymakers,” said Mr. Koce ahead of the Health Insurance Summit – 5-6 June 2019.
“The sector has been working hard to deliver value for money and we’ve had one of the lowest premium increases this year at just 3.25 percent – compared with 7 percent average annual increases in Commonwealth spending on public hospitals over the last three years. The private system is clearly doing well. But with younger consumers dropping out of the pool, maintaining affordability is a headwind the sector is now facing”.
Mr. Koce believes that the simplification of PHI products that came into effect 1 April this year and the promise of a nationally searchable website to promote the transparency of specialist fees that occurred earlier this year are positive steps in the right direction; but that there is still a lot more to do beyond these measures.
“There’s still significant untapped potential in the context of care in the home. The sector will need to keep abreast with advances in technology and innovation and treat more conditions outside of hospitals, in order to keep costs competitive,” he adds.
Mr. Koce would also like to see the idea of a national purchasing body for implantable medical devices (prostheses) taken more seriously – given the success of this very initiative in Europe; and the success of a comparative initiative (for pharmaceuticals) in Australia.
“Much like the pharmaceutical benefits scheme (PBS), I’d like to see an expert national purchasing body that could buy prostheses in bulk and get good prices for consumers of private health as well as for the public hospital system. This could deliver huge cost savings, driving down the cost of premiums and saving taxpayer dollars, potentially in the billions,” he says.
Matthew Koce is CEO of the Members Health Fund Alliance and a Member of the Federal Government’s Private Health Ministerial Advisory Committee Alliance. Expanding on these insights, Mr. Koce will present at the Health Insurance Summit – due to take place 5-6 June 2019 in Sydney.