Why the private health insurance changes won’t break the system
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The Australian Medical Association (AMA) and the private health insurance sector have been working hard to turn the Government’s proposal to lift penalties on middle-income earners without private health insurance into a major health system crisis. Unfortunately for them — although perhaps fortunate for the Australian health system overall — the figures simply do not support their position. Despite the threats of imminent public health system collapse if private health fund membership decreases, health financing statistics reveal that private health insurance (PHI) plays only a minor role in the overall funding of our health system. Australian Institute of Health and Welfare figures show that in 2005/06 PHI contributed only 7% of total health funding in Australia. Even if the AMA’s predicted one million people drop their cover as a result of the changes — and even if these one million people represent average health service users (very unlikely as those who drop their cover are expected to be lower level users) — the overall impact on health funding will be to reduce the contribution of PHI from 7% to about 6.2% of overall health funding. Given that annual fluctuations in health funding frequently vary more than this without causing major problems, even the ‘worst case’ scenario painted by the AMA won’t bring the public health system to its knees. To put the hype around this issue in perspective, consider the next largest source of health funding in Australia after PHI — direct consumer payments for health services. These now contribute over 17% of total health funding — more than twice as much as PHI — and yet receive scant media and policy attention. This is unfortunate as the impact of these payments on consumers can have serious implications for the overall performance of our health system. Out-of-pocket payments often fall disproportionately on people with conditions which require regular health care with uninsurable gap payments and annual limits (such as GP and allied health services) or who use medications not covered by the PBS. For example, people with Cystic Fibrosis often require regular physiotherapy and take a large number of (non-prescription) nutritional and digestive supplements on a daily basis. PHI is not an effective solution for people with conditions such as this, as even the highest level of PHI cover can still leave them with crippling out-of-pocket expenses. For example, the NRMA’s top extras cover “Extras Select Super Plus” imposes an annual $375 limit on rebates for physiotherapy. For someone requiring weekly physio treatment at $70 a session — there is not much “super” about this. If the AMA and the private health insurance industry were genuinely concerned about the affordability of health care for consumers, they would be focussing on meeting the needs of people with chronic health conditions who currently incur high out-of-pocket payments. Reducing these costs, through minimising gap payments and entering into fee agreements between private health funds and doctors, would deliver much greater gains in terms of the affordability of health services than continued efforts to bribe and cajole people to take out PHI. Increases in PHI numbers will not solve the problems within our health system and nor will a reduction in membership threaten its viability. The Government and the media should ignore the disingenuous postulating by the AMA and the health funds about the PHI changes and instead focus on the real issues affecting consumer access to health care. |
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9 Comments
James K, if you look at page 21 of the AIHW Report (Table 13) it gives a breakdown of the funding from the non-Government sector over the last ten years. It shows that during this time the share of funding contributed by PHI dropped from 11.3% to 7.2% while the proportion contributed through out-of-pocket payments increased from 15.6% to 17.4%.
‘In 2005–06, government funding of health expenditure was $58.9 billion (67.8%), with the
Australian Government contributing $37 billion (42.9%) and state, territory and local
governments contributing $22 billion (24.9%). The non-government sector (households,
private health insurance and other non-government) funded the remaining $28 billion (32.2%) .
From 1995–96 to 2005–06, the relative shares of funding of total health expenditure remained
fairly stable for both the government and non-government sectors.
Around two-thirds of funding was provided by governments and one-third by
non-government.” -From: “Health expenditure Australia 2005–06” copied from Australian Institute of Health and Welfare website. How does that tally with “Jennifer Dogget, health policy analyst”. Answer : it would seem not to. Crikey Philosophy: ‘Do not allow the facts get in the way of left wing lobsided pontificating’
At last !!, some good old fashioned critical analysis !! Another point that hasn’t registered is that the people that will be be letting go the their private health insurance are very likely those who joined because they had to! Many, if not most ,of them still used public facilities without declaring their private cover. I know two women who had babies like this! I doubt there will be much more call on public hospitals.
WRT “consumer out-of-pocket payments”: In 2005–06, of the estimated $15.4 billion out-of-pocket recurrent expenditure by individuals on health goods and services : • 34.2% was spent on medications – 8.0% on PBS and RPBS patient contributions – 26.2% on other medications (see Table 65 for a detailed definition) • 23.2% on dental services • 13.4% on aids and appliances • 11.3% on medical services • 10.7% on other health practitioners (such as physiotherapists, chiropractors and podiatrists). PHI basic cover covers only medical expenses. Daggett is not comparing like with like. I could go through this article point by point and expose similar dishonesty on each and every occasion but there is simply not enough room. Kez, read the original report on : http://www.aihw.gov.au/publications/index.cfm/title/10529 . This is an ideology driven article not a caring one and yes Kez I did read it….obviously
JamesK, did you not read the article at all? Jennifer talks about the large impact that out of pocket expenses from individuals has. And then you go ahead and quote “non government health expenditure” which INCLUDES out of pocket expenses from individuals as well as PHI. The statistics that you’re providing are completely consistent with her arguments and statistics.
Let’s be clear, both the AMA and PHI represent their own vested interests and not those of their patients or members. If as Jennifer Dogget’s statistics show that the demand for public hospital beds is not reduced in proportion to funds invested in PHI, what is the point of the government spending billions of taxpayer dollars to subsidise PHI? Far more cost effective ways of encouraging people to take out PHI are available without handing billions of dollars to middlemen who are hand in glove with the specialists whose numbers the AMA deliberately rations in order to maximise their incomes.
In addition to the roughly 1/3 rd of non government funding of total health care spending in Australia, the cost to the government of the proportion of the projected 1 million people who will now opt out and enter the public system is proportionally higher than the cost to the government of the government share of those same patient’s private hospital health care costs. They will also have to pay in addition signficant further public hospital infrastructure costs. Jennifer Doggett’s artistic use of published data figures is dishonest in terms of the impact of 1 million people leaving PHI. And!…. there are no individual contributions to a patient’s use of public hospital services. The public system, already groaning at the seams, can only get worse without a proportionally higher contribution of government spending and will certainly not be getting any better than the present already unacceptable situation.
I suspect that a number of people with private health cover who would normally be expected to drop it on economic grounds will actually stick with it. These are the people who have had bad experiences in the public system. I have always been a defender of the public system. However, after hearing about what my mother endured during a recent admission to Royal North Shore (the private hospital did not have any beds) I would recommend keeping private health insurance (at least you get your own doctor, even if you don’t get a bed in a private hospital). My mother’s experience included: unhygienic facilities (filthy, soiled toilets); the arrogant attitude and rudeness of some staff (in particular a Registrar who misrepresented the treating specialist’s opinion and the treatment); the lack of equipment provided for a recovering orthopaedic patient (and the patient’s own equipment being “lost” while she was away in theatre); several delays in providing badly needed pain relief; and last but certainly not least, the failure to document the medication given in the patient’s notes. This last was potentially very serious, as a second dose of an anti-clotting drug was almost administered when the patient was transferred to the private hospital - if she hadn’t been on the ball enough to insist that she had already had a shot of Clexane and that they check with RNS she could well have received a double dose. It seems pretty obvious that there are systemic problems at RNS (not just the odd mistake, which, while not satisfactory is more understandable).
So I’m telling people to hang on to their private health insurance, even if it does make economic sense to drop it (and even though I am ideologically opposed to the taxpayer subsidising it).
Alternatively, raise the Medicare levy so we don’t have two classes of health provision in this nation.
To Graham Palmer: The AMA have absolutely no power to control the number of specialists but, like Crikey, do not allow easily obtainable facts to taint your obvious prejudices.