Due to drastically disparate levels of coverage among insurers and hospitals, Australians with private health insurance are still experiencing “bill shock,” prompting calls for an independent regulator.
The Australian Medical Association’s newest private health insurance report card, which will be revealed on Tuesday, shows how benefits provided by various insurers for the same surgery can vary by up to 46%, or between the top and bottom insurers.
“It’s really difficult to tell what value you get,” said Omar Khorshid, president of the Australian Medical Association.
“If the insurer’s rebate is minimal, the customer’s out-of-pocket expense may be significant.”
And these out-of-pocket expenses can range from thousands to millions of dollars.”
According to the report card, a hip replacement can cost an insured patient $500 under an insurer’s “known gap” contract with a specific doctor and hospital, $1308.75 if there is no such arrangement, or free under a “no gap” arrangement.
Dr. Khorshid believes that insurers should be required to pay a minimum amount and that a new regulator should be established to oversee the business.
The proposed Private Health System Authority would set the amount of average annual premium hikes, which are presently set by Health Minister Greg Hunt, and make insurers “sustainable,” according to him.
Dr. Khorshid stated, “There needs to be a standardised return that is higher than the current private health insurance sector average right now.”
According to an analysis of rebates paid by health insurers for common procedures contained in the AMA report card, the difference in benefit for an uncomplicated birth ranged from $1613.90 to $2178.50 under HCF’s no gap scheme, with NIB paying only $1613.90 compared to $2178.50 under HCF’s no gap scheme.
NIB members – 27 funds including Defence Health, Australian Unity, GMHBA, and Teacher’s Health – received a payout of $653.30 for surgery to correct a groin hernia, compared to $954.60 for AHSA members – a differential of $301.30.
When it came to cardiac bypass surgery, NIB was once again the least generous fund, with a benefit of $3443.70 compared to $4246.10 from AHSA member funds, a differential of $802.40.
Health funds achieved an after-tax profit of $1.8 billion in the year to September, according to the Australian Prudential Regulatory Authority, thanks in part to windfall savings from lockdowns when members were unable to receive services.
Rachel David, CEO of Private Healthcare Australia, said the industry already has “many regulators” and that adding another would “increase management expenses for an unknown gain.”
Dr. David added that in a “typical year,” health funds paid out 88 cents in the dollar on average, and that while this had dropped to 83 cents during the epidemic, “the funds are paying money back to their members,” and that he expected an avalanche of claims after postponed surgeries were completed.
The federal Department of Health said it was reforming private health insurance to improve its value, affordability, and sustainability, and that it would update its medical cost finder website next year “so that consumers can get more visibility of the fees charged by individual medical specialists, including the availability of no and known gap arrangements,” according to a spokeswoman.
