Health fund exploitation risks Australian healthcare stability, says expert
SYDNEY, AUSTRALIA — Australia’s healthcare system faces significant challenges as various entities attempt to exploit health funds, potentially driving up costs for millions of insured citizens.
Rising premiums threaten private health coverage
Rachel David, CEO of Private Healthcare Australia, warned that treating health funds as cash reserves could have devastating consequences for the nation’s healthcare infrastructure.
In an article for the Australian Financial Review, David revealed unprecedented attempts by state governments and private hospital groups to raid health funds. She noted that a 1% increase in health insurance premiums could lead approximately 70,000 Australians to abandon private healthcare coverage.
This year alone, 216,000 individuals have downgraded their coverage, resulting in an AUD52 million (US$33 million) loss for insurers.
Clarifying health fund profit misconceptions
David addressed misconceptions about “excess profits” in health funds. During the pandemic, as claims decreased due to lockdowns, health funds accumulated cash but returned these funds to consumers rather than keeping them. This was confirmed by the Australian Competition and Consumer Commission.
Despite this transparency, David noted that some private hospital groups aggressively seek more payments from health funds, even terminating contracts to exert pressure.
NSW government’s health fund levy impact
David highlighted the New South Wales (NSW) government’s previous decision to raise AUD140 million (US$90 million) annually from its 4 million health-insured citizens as a concerning example.
The NSW government and private hospital groups have been attempting to draw from health funds to resolve budgetary issues, ignoring that these funds are intended to manage consumers’ healthcare finances.
This action could trigger a 2.5% premium increase in NSW, potentially forcing more citizens to abandon private coverage and further straining the public health system.
Healthcare reform: Modernizing Australia’s medical system
David emphasized the need for systemic reforms to ensure a sustainable private health system. She is advocating for federal government reforms that prioritize consumer interests over vested ones, such as scrutinizing medical specialists who charge high fees and may be defrauding Medicare and health insurers. Implementing an opt-out system for fee transparency and surprise billing laws could protect consumers from unexpected costs.
Additionally, outdated care models contribute to inefficiencies within the healthcare system. Much of healthcare is still delivered in expensive hospital settings when it could be provided more cost-effectively elsewhere. The federal government should revise regulations to encourage modern care models like short-stay surgeries and home care programs. Reducing incentives for unnecessary small hospitals and focusing on areas of need could optimize resource allocation.
Without significant reforms prioritizing consumer interests and modernizing care delivery, treating health funds as cash cows will only exacerbate the challenges facing Australia’s healthcare system.
