Business urges action on health system

While supporting NSA’s call for a review of the private health system, the Business Council also wants seniors to pay more for their aged care.

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28 November 2024
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Demonstrating our commitment to better health for seniors, National Seniors Australia (NSA) has long advocated for serious policy reform to break the cycle of ever more expensive medical and health care.

Costs to the consumer keep rising – for aged care, visiting the GP and specialists (out-of-pocket costs), and private health insurance (PHI).

We knew we were on the right track advocating on these issues because you told us they are major concerns.

We’re pleased to see other major community stakeholders step up to advocate on these matters as well.

The Grattan Institute has reported on reducing financial waste and inefficiency in the public hospital system and the Business Council of Australia (BCA) has issued a major report on reforming the health system.

The BCA report calls for a full system review and greater transparency in funding and operations - which aligns with what NSA has been recommending for years.

Not only is PHI increasingly expensive but its operation and financial settings are complex and opaque, especially to the consumer.

Seniors, and others, are understandably concerned about the growing unaffordability and poor value proposition of PHI. That’s why we want the Productivity Commission to undertake an in-depth inquiry into PHI with a particular focus on 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.

You can read more about this initiative and others of our transformative Better Health policy campaign recommendations here.

The BCA report

In the Supporting a Healthy and Productive Nation report, the BCA is recommending that the Productivity Commission (or Treasury) analyse all health and care funding levers, including income tax, goods and services tax, Medicare levy, PHI rebate, superannuation, and the Age Pension.

It says, “This analysis should ensure intergenerational fairness and the long-term sustainability of the system. This goes beyond the current five pillars work the PC is undertaking, and ideally is part of a broader tax system review.”

In addition, the BCA wants a review of the Private Health Insurance Act 2007 to determine whether the legislation is still fit for purpose, “given the changing disease profile and ageing population”.

Any review should also evaluate the effectiveness of past reform, such as those of 2019–20, which included product tiers (gold, silver, bronze, and basic) designed to mandate minimum service coverage. No comprehensive evaluation has been conducted to determine the effectiveness of these reforms or their potential unintended consequences.

The review should also investigate whether legislative barriers should be removed to allow private health insurers to fund hospital-substitute care and expand their ability to fund out-of-hospital care, particularly in mental health.

Setting prices

Since 2014, the report says, PHI rebates have continued to decrease, making it harder for consumers to access and pay for services in both the public and private systems. The rebate for consumers aged under 65 has reduced from 30% to 24.288%.

The BCA wants the government to rename the existing Independent Health and Aged Care Pricing Authority to the Australian Health and Care Pricing Authority and expand its remit to provide independent and transparent advice on pricing for services across health, disability, and ageing. The Authority would have responsibility to assess and approve annual private health insurance premiums.

The report makes the interesting observation that funding and staffing of the health, disability, and ageing sectors, has become more intricate. It notes, “Significant pricing disparities for NDIS services have led to an increase in health and care workers transitioning from health and aged care to the NDIS.”

Funding aged care

If you’re still concerned the recently introduced Aged Care Act provisions that require people who are in the financial position to pay more for their aged care – at home and in facilities – to do so, then the business sector wants you to pay even more.

“Australia’s ageing population, combined with older Australians’ desire to remain in their own homes longer, will require increased contributions to cover those costs,” the blueprint says.

“The Australian government should explore other ways for those who have the capacity to pay to fund their aged care through a greater variety of financial products.

“Superannuation was introduced to support people when they retire, yet people are not utilising these funds. Flinders University notes that compulsory long-term care insurance exists in other countries but would be innovative for Australia.”

The report says the financial services sector should develop a broader range of financial products, such as annuities, which set aside a specific amount for aged care.

Out of pocket expenses

Out-of-pocket expenses are a key reason many Australians avoid accessing certain services. These costs are not capped by the government and vary significantly depending on the specialist, procedure, and location.

The BCA report says the average out of pocket payment for a hospital episode has increased by 10.4% to $470.80 and for medical services by 6.6% to $270.81, compared to the same quarter for the previous year.

In 2023, the average out-of-pocket cost for a non bulk-billed GP attendance was $43.42. These costs remain consistently high for people aged 16–64, while the 65-and-over cohort pays the least.

The report says these expenses are a primary reason for deferred healthcare. The BCA wants the government to expand the online Medical Costs Finder, which was released to help Australians understand costs for GPs and specialists, “but participation by specialists has been voluntary and uptake limited”.

Some international comparisons:

Germany: Co-payments are capped at 2% of gross income for all consumers and 1% for chronically ill people, above which all care is provided.

United Kingdom: The National Health Service provides free public healthcare, including hospital, physical, and mental health services.

Netherlands: Visits to primary care, maternity care, and child health facilities are fully covered, while other health services are covered by a general social insurance scheme.

Related reading: BCA, The Australian, Grattan, NSA