Private cover proposals ‘pea and thimble’ trick

Proposals from the Grattan Institute suggesting the introduction of community rating for private health insurance was this week labelled a complex ‘pea and thimble’ trick.

Australian Private Hospitals Association (APHA) CEO Michael Roff says the newly released report, ‘Saving private health 2: Making private health insurance viable’, claims to offer solutions to save private health insurance, but would actually do damage, including – by the authors’ own admission – older Australians paying more for their health insurance.

“By allowing health insurers to risk-rate insurance for those under 55, anyone in this age group who has a chronic health condition, has previously had surgery or who has a history of mental health issues would effectively be priced out of the private insurance market, throwing even more demand on the overburdened public hospital system,” he said.

“The proposals rely on illusory savings from the report released last week, when the report authors calculated billions of dollars of savings based on reducing bed days for private patients – ignoring the fact that, overwhelmingly, private hospitals are paid per episode, not per day.

“This report merely compounds the errors and misunderstandings of the private health sector the authors were so keen to talk about last week.”

However, Mr Roff believes there is room for improvement in the current system by adjusting existing policy measures including the private health insurance rebate, lifetime health cover and the Medicare levy surcharge.

“We have a set of policy measures for private health insurance that have been effective over time, but are now 20 years old,” he said.

“The Australian health system as a whole would benefit from some sensible adjustments to these policies, to ensure they’re relevant in today’s environment.”

“The Grattan Institute’s complex and convoluted proposals would damage both the public and private health systems.”


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