AMA calls for private health reform
Private health insurance premiums are set to increase on 1 April. Doctors want us to shop around for value, but NSA says the whole sector needs reform.
Win on bulk-billing
Most Australians will have access to a bulk-billing doctor after the Federal election – if both major parties honour promises made in the past week.
Not long after the Government pledged an $8.5 billion boost to Medicare funding if re-elected, the Opposition vowed to match it if it gained office.
Labor said the policy would mean that nine out of 10 GP visits will be free from out-of-pocket expenses by the end of the decade.
Doing so would be a victory for seniors. National Seniors Australia (NSA), has long fought to reduce out-of-pocket health costs as part of our Health Costs campaign.
Older Australians have known this for years and National Seniors Australia (NSA) has been in the ears of our politicians recommending improvements.
So, it is pleasing to see that doctors now are stepping up to say that the private health sector, especially private health insurance, is no longer fit-for-purpose or delivering on what it was set up to achieve – that is, to enable affordable medical and health benefits for those who choose to use it.
NSA’s Better Health Campaign explains our position on this important issue, including how the government can bring down health costs. More on that later.
Among a range of issues, the AMA’s Private Health Insurance Report Card 2024, highlights what it calls the overall complexity of choosing the right health fund and level of cover.AMA president, Dr Danielle McMullen, says choosing private health insurance is a confusing experience, with the report card showing rebates for identical procedures vary greatly between insurers.
“Consumers should look at the upfront premium cost of the policy, but they should also closely look at the rebates for any procedures they are likely to need,” Dr McMullen said.
“For example, we found a $510 difference between the highest and lowest rebates for the uncomplicated delivery of a baby.
“Private health insurance premiums will inevitably rise on 1 April by an as-yet undetermined amount. It is an important time for consumers to look at their options.”
Comparing funds is fine and good, and is to be encouraged, but because choosing private health insurance is a confusing experience, that highlights the very problem people face: complexity and lack of transparency that appears to be built into the system and industrialised by the insurers.
When confronted by withering complexity, my mother use to say, “It’s too much for the human brain!” I feel that way when I try to gauge my private health insurance policy against other options.
It’s time for the private health insurance sector to be reviewed. NSA says that job should go to the Productivity Commission, which should focus on identifying ways to improve the value proposition to policy holders in general and older policy holders in particular.
The review should look at the:
Growth of private health insurance premiums and out-of-pocket expenses
Value and scope of product offerings covered by private health insurance
Reforms needed to minimise premiums and out-of-pocket costs.
In our 2025-26 Budget Submission, NSA has suggested to the Federal Government that now is the opportunity for it to establish the review. Also, confronted by a looming election, we urge all political parties to commit to a review as per our policy recommendation.
There’s more that government can do in this space. In our budget submission, we also call for:
An increase in the value of the Private Health Insurance Rebate for people on low incomes
A targeted Seniors Dental Benefits Scheme to help seniors access essential dental care.
It is not surprising that the AMA is backing our urgent call for reform.
It recommends an independent private health system authority be established to drive long-term reform, provide appropriate regulation and ensure patients get real value for money.
“Urgent reform is needed, as patients are finding it increasingly difficult to access care under their private health insurance policies,” Dr McMullen said.
“In the past few years, 70 private hospitals have closed or downgraded their services in critical areas such as maternity, mental health and reconstructive surgery.
“An independent body is needed now more than ever. In 2024, we saw insurers and hospitals getting into stoushes over funding – leading to major uncertainty for patients.”
The AMA’s report card provides additional insights into the escalating cost of private health insurance.
Over the past five years, net insurance profits (including net private health insurance investment income) have risen much more sharply than benefits paid to patients.
While net profits for insurers have increased by almost 50%, the patient rebate for medical services has increased by just over 10%.
Dr McMullen says there’s been a slight improvement but insurers should be returning more in benefits to patients as a proportion of premiums.
“Our analysis shows 84% of hospital insurance policy premiums were returned to patients in the form of rebates and other benefits for hospital treatment last financial year – a small improvement from the previous financial year, but still well below where it should be."
The AMA is calling on the Federal Government to mandate insurers to return at least 90% of private health insurance premiums back to consumers in the form of benefits.
Related reading: AMA report card, NSA
