Medibank attack’s collateral damage on private health

by on November 3, 2017

THE Howard-Abbott-Turnbull attempts to bury Medicare while publicly praising it and its attempt to boost the bottom line of the private health providers are now proving to be corrosive not only of the public health system, but of the private system as well.

A couple of weeks ago I wrote that the Government’s bribing and blackmailing people (especially young people) to take out and keep private-health insurance by reducing premiums by a trivial amount missed the point. The main gripe is not so much high premiums but the shocking out-of-pocket and gap expenses that privately insured people face when they come to call upon that insurance.

Since then several readers have told of their experiences. There has also been evidence to the parliamentary committee on private insurance.

The typical patient experience is horrific. A lot of insured people imagine that because they have the highest cover that they will be able to jump the queue, choose their specialist (on their GP’s advice), get treated and the insurance will cover them. Wrong.

Insurance covers mainly hospital expenses and very few medical expenses. So having jumped the queue and chosen a specialist, imagine some patient’s shock when they get told by their surgeon, anaesthetist, intensivist and/or other specialists that they charge the AMA recommended fee, not the Medicare Schedule fee. And the patient will have to pay the gap, usually handing over credit card details before the procedure.

Over the past two decades the difference (the gap) has been getting larger and larger.

One reader told me of a $7000 gap for major thoracic surgery. Another told of a bill of several thousand for eye surgery. Another of $8000 for double knee replacement surgery. And another of $4000 for a single knee replacement.

Day 1 in intensive care at many private hospitals leaves the patient with an out of pocket expense (after Medicare and private rebates) of between $450 and $750 and up to $500 every subsequent day.

Even fairly well-off people would find these expense difficult to swallow. Less well-off people, having already struggled to pay the private-heath premium, might well baulk at these quotes and not be able to pay. They would then be forced to go public which would mean joining the very long queues and to have assigned specialists who are willing to accept the Medicare-approved fee only in a public hospital.

They then would quite reasonably wonder why they ever bothered with private health insurance in the first place.

So while the Howard-Abbott-Turnbull Governments have cruelled Medicare payments to both GPs and specialists – freezing them sometimes or not increasing them with inflation, let along the wage index – the unintended consequence has been that they have created a gap on the medical side of private medicine so great that people with private insurance are reassessing.

This is why the number of people with private insurance is plummeting.

The trouble is that the public hospital system is being squeezed also.

It is all ideologically driven.

Health Minister Greg Hunt said recently, “Private health is fundamental to choice. It’s fundamental to the ability of Australians to have peace of mind.”

Well, there is no peace of mind for people faced with gap fees they cannot afford in the private system, on one hand, and the waiting times in the public system, on the other. And there is no peace of mind if a for-profit fund restricts what procedures it will cover and at which hospital and with which specialist.

Real peace of mind comes with a properly funded, universal public system.

But Australia is slowly going from having one of the best, most efficient health systems in the world to one where, as in the 1960s, you cannot afford to get sick.

The Howard-initiated tax deduction for private health cover is now a $6 billion-a-year piece of middle class welfare that could be better spent in the public system, particularly by increasing the Medicare payments to GPs and specialists for their work in both the public and private systems.

The private health funds are notoriously inefficient, spending about 10 per cent of premiums on administration, compared to Medicare’s 3 per cent.

The Government has foolishly toyed with the private insurers’ proposal of not permitting patients to use their private health insurance in public hospitals, so that when a privately insured patient uses a public hospital the public sector picks up the tab. It is a classic of wanting to socialise losses and privatise profits.

If Minister Hunt is so keen on choice, privately insured people should be able to choose to use their insurance in the public hospital. That position is supported by the AMA.

The public hospital ban is not the answer. Nor is the problem one of specialists charging too much. AMA president Dr Michael Gammon told this week’s parliamentary inquiry that a survey among specialist members showed that more than 90 per cent of them would not even cover their costs if they charged only the Medicare Benefits Schedule.

In the past seven years, he said, the MBS had either been frozen of gone up 2 per cent a year. Meanwhile, the health inflation index had gone up more than 6 per cent a year and specialists’ professional insurance premiums 5 per cent a year.

So if specialists charge the AMA rate which has gone up with the health inflation rate, the gap gets bigger. That makes it appear as it the specialists are charging more when in fact their income has stayed about the same.

The overall result is that the Government’s attack on the public system is now corroding the private system.

The Coalition wants Medicare to be seen as a safety net for the poor rather than a universal health insurance scheme that provides health care promptly for all, not just the poor and catastrophically ill.

The overall benefits to the universal approach are seen by international comparison. New Zealand, Britain, Canada and Australia all get the better health outcomes for a lower percentage of GDP spend than the US, but Australia is slipping.

Gannon highlighted another problem: “The shift to a for-profit industry . . . is driving much of the growth in increased premiums.”

It would be good, however, if the AMA were a bit more open about specialists’ fees. It refuses to make its recommended schedule of fees public.

This leads to the question of whether that is morally or legally acceptable.

The Australian Competition and Consumer Commission says it has “identified broad issues of concern across all professions that may lead to breaches of the law”. One of them is “restricting and controlling markets through imposing prices, in particular via recommended price schedules”.

The doctors would do their cause a lot of good if they were a bit more open. It might prevent them being made a scapegoat when the real problem is the Government not keeping the MBS payments realistic, and greedy, inefficient, restrictive, for-profit health-insurance companies.
This article first appeared in The Canberra Times and other Fairfax Media on 4 November 2017.

{ 4 comments… read them below or add one }

Elly 11.04.17 at 3:34 pm

Good article Crispin. I know of many people, ourselves included, who have jettisoned private health insurance partly because the premiums are too high to afford, but also because the gap costs have grown larger and larger. There is another story here too: the outrageous cost of dental care in this country. It is not covered by Medicare. Why is this? Dentists’ fees seem to be completely unregulated and their fees are exorbitant for what we are constantly told is an essential element of good health care.

Fiona 11.06.17 at 8:25 pm

Good article. I have had health insurance for almost 30 years, and every month when the premium comes out of my account I wish so much that I could walk away from it. I’m worried about the expense of trying to get back in later if I need to. The thing I resent the most is that we hold the open ended risk, not the insurer. This is the opposite of other types of insurance, for example with car insurance where we choose our premium/excess, and we always know what our costs will be if making a claim. The insurer is then responsible for the rest of the gap. Surely this is the whole point of insurance. Why is health insurance treated differently to other kinds of insurance in this way?

Kenneth 11.06.17 at 8:53 pm

Surely this insurance ‘scam’ if far more significant and pervasive than the COMMINSURE situation that got so much airplay recently. Basically the customer is not really receiving ‘insurance’ in any meaningful sense, as your article indicates and most of us have experienced. I’d like to see some of our regulatory authorities get their teeth into this matter, even if it ‘bites the hand that feeds them (the government).

Audrey 11.07.17 at 12:22 am

The Coalition may wants Medicare to be seen as a safety net for the poor but that is not the reality nor should it be the goal (exhibit A: US). There is no semblance of comprehensive cover with private health because it appears to have been created as a strongly-encouraged complement to Medicare, NOT a superior substitute.

I fully support a more accountable private health insurance system, but I’m far more interested in the public system as well as the government-created labyrinth of funding and laws.

Many of the criticisms of private health insurance are government-created. Who is responsible for prohibiting private health insurance companies from paying for outpatient consultations, pathology, imaging, etc? Who has frozen rebates, reducing access and inviting free market conditions? The government that’s taking stabs in the dark

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