Medibank welcomes Government consultations on future of private health insurance
Medibank welcomes the Australian Government’s announcement of public consultation on future private health insurance policy and regulation and looks forward to being an active contributor to it.
Responding to the announcement today, Medibank Managing Director and CEO, George Savvides recognised the Health Minister Sussan Ley’s focus on consumer value as the key guiding principle for the consultations.
“Private health insurance is a critical part of Australia’s health system, providing consumers with greater choice in how their healthcare is delivered and reducing demand on the public system. Yet private healthcare is under stress as costs continue rise, pushing premiums higher and causing consumers to react by reducing their cover. Minister Ley has correctly identified this issue of value as central to sustaining participation in private health insurance” said Mr Savvides.
“It is important this review not simply focus on private health insurers and how they are regulated but look at the wider health sector as well. This is critical as addressing the challenge of private health insurance affordability can only be done by taking a holistic view of the system and the cost pressures within it that drive premium growth.
“This is why Medibank in particular welcomes the appointment of Professor Graeme Samuel AC to lead the review. In Graeme the Minister has found a person who brings the needed expertise in regulatory reform along with health industry knowledge and commercial acumen.
Mr Savvides noted there are a number of existing, well developed propositions within the insurance industry that can be acted on quickly and will enhance consumer value.
“Insurers have been talking about the inflated costs of prostheses in the private health sector for years. Addressing device pricing simply by reducing it to similar levels paid in the public system or in comparable overseas economies will have a large and immediate impact on premiums. We are pleased the Minister recognised this issue in her speech at the National Press Club today.
“We also advocate lessening the regulation around price setting. While it may look to some observers as though Government approval of insurance premiums helps to control premium growth, in reality it leads to insurers having to account for greater uncertainty when setting premiums and lessens price competition, so actually contributes to them being higher than they otherwise would be”, he said.
Medibank also recommends the Government considers revising excess caps giving consumers greater control over their premiums and introducing new incentives to encourage younger people to purchase private health insurance.
More broadly Mr Savvides sees possibility in private health insurance helping government’s address the health care costs associated with people living longer.
“We need to find a way to enable people to provision for the cost of their private health insurance in retirement while they are still of working age. After all it is in our latter years that we start to draw more on healthcare, yet due to the challenge of affordability some people are forced into the public system and it is taxpayers that end up wearing the cost.”
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