Private health insurance fails consumers

Private health insurance fails consumers

The Australian Dental Association (ADA) welcomes the Nick Xenophon Team’s push for a Senate inquiry into rising medical and private health insurance costs.

A Senate inquiry into private health insurance will provide a well overdue chance for consumers and healthcare practitioners to inform the Australian Parliament about how private health insurance, for many years, has failed to offer consumers value for money, while reducing consumers’ ability to choose their healthcare provider and maintain continuity of care at the same time.

“The push for a Senate inquiry delivers on a promise made by South Australian Senator Nick Xenophon of the Nick Xenophon Team to the ADA for greater scrutiny of the private health insurance industry,” ADA President, Dr Hugo Sachs said.

“The ADA has been working closely with Senator Xenophon, to consider how large private health insurers can be made more accountable.

“A Senate inquiry is critical because the ADA does not believe that the Australian Government and the Federal Health Minister’s Private Health Ministerial Advisory Committee adequately focus on general treatment (extras) policies. The focus of private health insurance industry reform has been on hospital policies, particularly prostheses. However, more Australians have private health insurance policies for general treatment or ancillary (extras) services than hospital policies – 13.5 million vs. 11.3 million policies.”

Consumers have had to pay annual premium increases that are higher than both the health and overall cost of living index (CPI).

Analysis of publicly available figures on the amount of money the industry receives from general treatment premiums and how much they give back via general treatment policy rebates shows that the industry has amassed a $6.2 billion surplus from general treatment premium revenue alone since 2012.

In other words, consumers pay more but get less back, which means higher out-of-pocket costs.

Dr Sachs continued, “Not only are private health insurers failing to adequately increase their rebates for general treatment services, they use discriminatory rebates making it harder for consumers to see the healthcare provider of their choice; interfering with their continuity of care.

“Common in private health insurance, discriminatory rebates offer higher rebates for the policy holder seeing a health provider contracted to that private health insurer, yet another policy holder paying the same premium for the same policy receives a lower rebate if they choose to maintain a relationship with their existing healthcare provider who is not contracted to that same private health insurer.

“Discriminatory rebates make one policy holder have higher out-of-pocket costs while effectively subsidising the other policy holder who sees the insurer’s contracted practitioner. This also has the effect over time of driving out small business independent practices. It’s a triple whammy.”

Private health insurers have also deflected attention away from their low rebates and discriminatory rebate practices by asserting that health practitioners’ fees are to blame.

However, dental fees have been lower than premium and health CPI increases over many years.

These practices are consistent across the private health insurance industry, and not only damage consumer’s access to dental care, but their access to other healthcare providers.

Dr Sachs concluded, “The ADA urges the Senate to establish an Inquiry into private health insurance to ensure consumers get a better deal. The status quo is not acceptable.”