We’re lucky in Australia, our dual private/public health system is one of the best in the world. But you can’t have a conversation about private health insurance in Australia without hearing about rising costs and falling participation.
This week I spoke on a panel with Robert Cooke from Connelly Health Consultants, and Tim Daniel, CEO of St Vincent’s Private Hospital Sydney, at the UBS Australasia Conference, to discuss some of these challenges and what can be done to improve the industry.
One of the costs Medibank is tackling is protheses. Robert quoted a US investor who referred to Australia as the ‘Treasure Island’ for medical device companies.
We are paying up to three times the price for a medical device in the private system when compared to the public system and prostheses prices in the Australian private hospital setting are amongst the highest in the world.
A private hospital in London pays $AU27,000 for a St Jude Medical pacemaker. The same device in Australia is listed at $52,000 – meaning a 93% mark-up.
Prostheses account for more than 13% (around $2.1 billion) of total benefits paid for hospital cover in Australia. A material cost to private health insurers and, subsequently, one of the key factors in the cost of private health insurance premiums for consumers.
We need greater action on protheses reform which would relieve a lot of pressure on our health system and ultimately our customers.
We also spoke about the challenge of young Australians dropping out of private health.
We all agreed the young adult discount was a great opportunity to boost younger participation. But it was a voluntary reform that hasn’t been promoted, so not many people know about it.
But there are other ways we can encourage young people into private health insurance.
We talked about how employers are beginning to think more broadly about ways they can support the health and wellbeing of their employees. If employers can provide private health insurance contributions to their people, it’s a terrific way of investing in their health. This would also boost participation in private health insurance and improve affordability. We’ve made no secret about advocating for a fringe benefit tax exemption for companies that do provide these contributions.
Our world class health system is one that needs to be maintained for future generations.
But there is a big job ahead for all of us to ensure that the quality and affordability of the system is to be maintained for future generations.
Medibank CFO Mark Rogers was a speaker at the UBS Australasia Conference in Sydney this week