Deep cuts needed to ease medical bill shock

Private health insurance premiums will rise by an average of 4.41% from April, reflecting the rising costs of medical and hospital services.

It is the biggest rise in almost a decade following Federal Government approval and again is leading consumers to question the value of private health insurance (PHI). 

National Seniors Australia (NSA) says the price increase further supports its call for an urgent independent review into the private health sector. More on that later. 

There has been some movement, hopefully better news, on another price scourge of health consumers: the ballooning cost of seeing a medical specialist. 

It is a feature of Australia’s medical system that specialists are free to charge whatever they like, the only impediments being market conditions and consumer tolerance. 

Federal governments have long steered clear of intervention, based on a traditional reading of the Australian Constitution, which disallows laws that result in the practical compulsion of doctors to provide a service in a particular way.  

However, media reports suggest Health Minister, Mark Butler, is considering testing constitutional limits and has asked his department to examine the legality of direct fee regulation. 

“I’ve asked for all options to be put on the table and for us to think very, very deeply and creatively about what we can do to protect patients’ interests here,” Mr Butler told The Australian. 

“The growth in out-of-pocket costs, and the wild variability that you see, is becoming a really serious access and affordability issue. I know there’s a lot of interest in seeing whether we can maybe test the constitutional boundaries of policy options, and I imagine that will be among the advice that I receive.”

However, any attempt to regulate doctors’ fee-charging practices may trigger a constitutional challenge by doctors who have already come out in opposition. They say public health system should be better funded, which would ease demand on the private sector. 

“So, rather than constraining the private sector, let’s invest in the public sector so that Australians genuinely get a choice,” an AMA spokesman said. 

A Grattan Institute report found that one in five patients was charged “extreme fees” by specialists, which was defined as three or more times the Medicare schedule fee.  

Medicare schedule fees are much lower, however, than the AMA fees list, which provides guidance to doctors on appropriate fees reflecting health inflation and the costs of running a practice. 

Health Department officials told Senate estimates that out-of-pocket costs for patients for a specialist consultation had risen to an average of $123, up from $49.56 in 2010-11. 

NSA has long called on federal governments to improve the transparency of specialist fee setting and enable consumers to compare specialists’ costs. 

So, while we are pleased the government has finally introduced legislation to fix the Medical Costs Finder website, helping people make informed decisions about their health care, greater transparency of the private health system, including medical specialist fees is needed. 

We’ve told government this would be best achieved through a full Productivity Commission review of the private health system, lifting the lid on rising premiums and out-of-pocket costs.  

NSA CEO, Chris Grice, says NSA research shows private health insurance is the second biggest concern for seniors, behind cost of living.  

“Rising private health insurance premiums and out-of-pocket specialist costs significantly impact older people who may be likely to develop health conditions yet experience reduced income as they move from work to retirement, making affordability paramount,” he said.    

“While most people need private health, rising premiums and out-of-pocket costs undermine its value. There is an opportunity for real change, real reform.”   

An independent inquiry would focus on:   

• The growth of PHI premiums, specialist fees, and out-of-pocket expenses  

• The value and scope of product offerings covered by private health insurance  

• Reforms to minimise out-of-pocket costs.