The federal health minister, Sussan Ley, on Sunday announced that the government was undertaking a survey to gauge how the private health insurance system was serving the public.
But the questions in the survey have led medical groups and some public health experts to warn that the government is laying the groundwork for changes in the sector that could jeopardise the universality of the Australian health system.
What is covered in the survey?
The survey contains questions relating to which services and treatments should be covered by private health insurance policies, and whether policies are competitive and easy to understand.
But it also contains questions on whether private health insurance should be extended to general practice visits, and whether funds should be able to charge different premiums depending on age, sex and whether the policyholder smokes.
The treasurer, Scott Morrison, told reporters that the survey was aimed at making sure the health system was “responsive”.
“What we’re doing more generally in that area is that we have a fit-for-purpose, modern 21st century system that understands the new treatments, the new demands on the system,” he said.
Why is that important?
Some have warned that charging different rates for policies would effectively undermine the “community rating” principle of private health insurance in Australia.
The community rating principle means that every person can buy a product for the same price, and that a health fund cannot refuse to insure someone on the basis of the policyholder’s health or how likely they are to make claims.
The head of the Australian Medical Association, Brian Owler, said that scrapping the principle would jeopardise the universality of healthcare more generally.
“Do we want to go down a US system where we have risk rating, where we push people out of private health insurance system because it becomes unaffordable? I mean these sorts of issues we take for granted in Australia, but I tell you that these are things that people are fighting very hard for in places like the US,” Owler told Macquarie Radio on Monday. “At the end of the day, the insurers are only going to want to insure those people that are fit and healthy and don’t need anything done to them.”
Ley denied that the survey was intended to push Australia down the path of a two-tiered health system where rich clients can pay for higher quality healthcare.
“This is not about the Americanisation – the language people use – of the system. This is not about undermining the universality of Medicare,” she told ABC radio on Monday. “This is not about saying to people, you are on your own when it comes to healthcare.”
Ley argued that changing the private health insurance system would not “price people out”, saying that the number of policies being bought now are “flat-lining”, suggesting that some policies are not cutting it with consumers.
Owler warned that pushing people off private health insurance because they are unhealthy or likely to make more claims would put more stress on the public hospital system.
But Ley said the survey was about seeing what constitutes value for money for consumers.
“If the overwhelming response to me is the community rating – which means that everyone pays the same – should stay, then there’s every chance that it will,” she said.
What does that mean for current policyholders?
The health minister has stressed that any future reform of the private health system will not affect current policyholders.
“I am not about taking away the universality of Medicare, the general government insurer, to look after people. Nor am I about changing people’s current private health insurance policies,” she said. “[This] is more about the future, not about penalising people who are insured today, who, for example, might have started smoking when the doctor even suggested that they do it.”
She has backed the community rating system, to a point.
“I’m committed to it for people who have policies now, because I don’t want to make changes based on the expectation that people had when they took out their current policy,” Ley said. “What we’re doing now is forward-looking.”
Charging different premiums based on demographic and lifestyle factors would actually benefit young people, Mark Metherell from the Consumers Health Forum told Guardian Australia, as younger policyholders generally lodge fewer claims.
“But it would mean costs go up for older people,” he said.
What are the ramifications for the future?
Labor has warned that including a question on how consumers feel about extending private health insurance to cover GP visits means that they are effectively “ripping apart Medicare”.
“If the government is intending to go down this pathway of a two-tiered American system where you have private health insurance getting into the business that is now Medicare, then they will have a very big fight on their hands,” the shadow health minister, Catherine King, told reporters on Monday.
The former secretary of the federal Department of Health, Stephen Duckett, told Guardian Australia that he is “very worried” about the prospect of private health insurance covering services that are currently covered by Medicare, a prospect he labelled “undesirable”.
“If private health insurance were able to cover GP visits it may end up being inflationary,” Duckett, who is now the director of health policy said. “The proportion of bulk-billing would go down.”
Metherell warned that GPs would preference patients with private health insurance who could potentially pay more for visits.
“It’s going to deliver an unequal, uneven result,” he said.
The Royal College of GPs also has concerns.
“Patients in Australia currently access GP services regardless of their private health insurance status and any pilot project or program must not create a system where patients with private health insurance receive preferential access,” the president, Frank Jones, said. “It also risks creating a system where insurers dictate care and treatments, taking away the clinical autonomy and decision-making central to general practice, which could have a detrimental effect on patient health.”
Ley said that the consultation was not about whether patients were served by the Medicare system, but about hospital care.
“This has nothing to do with visits to your GP whatsoever. It’s about your treatment in usually a private hospital and your ability to have the treatment done by a doctor of your choice in the setting of your choice,” Ley told reporters on Monday. “I want to see first and foremost a strong hospital care product for people who take out private health insurance.”
The AMA thinks that potential changes to the community rating of private health insurance could mean people have to go to great lengths to be insured in the future.
“The question here is where does it stop, because we also know that genetic testing is going to be able to predict very accurately whether someone is going to or [is] more likely to develop a certain kind of disease or condition in the future,” he said.
King said that consumers paying more for a premium because of their family medical history is “a very real prospect”.
“When you start to abolish community rating it’s a very slippery slope,” she said. “When you start to say that these people should pay more, where do you stop, where do you draw the line? Is it because people are overweight? Is it because they drink an extra glass of alcohol? Is it because they don’t do enough physical exercise? Are those the sorts of things that you are going to introduce?”
How should the private health insurance system be reformed?
All the stakeholders Guardian Australia spoke to agreed that the system needed to be changed, but nearly all wanted to protect community rating.
The Greens leader, Richard Di Natale, who is a former GP, thinks that the federal government needs to pump more money into the public health system so that private health becomes an optional extra rather than a necessity.
He wants any future reform to look at the value of money for consumers of the private health insurance rebate.
“We were told that would take pressure off the public health system. It’s done nothing of the sort. In fact, what it’s done is it has made the system less fair and less equitable,” Di Natale said.
The Consumer Health Forum wants a more in-depth look at the private health industry, broader than the survey announced on Sunday.
The study, which the group proposed should be undertaken by the productivity commission or similar body, would look at issues such as value for money in policies, the impact of the federal government rebate, and supply and demand factors on the industry.
Owler thinks reform should take into account the policies offered by individual funds.
“I think we need to make sure we keep in check the behaviour of our private health insurers, particularly when we have a private health insurer as a publicly listed company, and its duty is to its shareholders,” he said.
Duckett wants reform to include better resources for new and existing health fund customers.
“There needs to be a whole lot better information given to consumers on their [funds’] policies,” he said.