Prescription needed to fix private health insurance death spiral

author-avatar By
on May 20, 2021
Prescription needed to fix private health insurance death spiral

 

 

 

A new report has urged the federal government to forge a rescue plan to prevent Australia's private health industry from spiralling to its death.

The private health insurance industry has been on a well documented downwards trajectory over the years thanks to a heady combination of an ageing population, increased use of healthcare services, and rising premiums that make insurance unaffordable and unappealing - especially to young people.

Now, The Grattan Institute has released a new report titled 'Stopping the death spiral: creating a future for private health', a follow up to one of its previous reports where it claimed health insurance was in a death spiral, particularly among young people. 

"For the past 20 years, private health insurance premiums have been rising faster than wages and inflation. Australians are paying more but getting less," the Grattan report said.

"The COVID crisis hasn’t saved private health. The industry was in a death spiral before the pandemic and it’s still in a death spiral today."


Need somewhere to store cash and earn interest? The table below features savings accounts with some of the highest interest rates on the market.

Lender

4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Special intro rate
  • No ongoing fees
  • No minimum balance

Online Saver (Amounts < $499999)

  • Special intro rate
  • No ongoing fees
  • No minimum balance
001$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details
  • Take money out at any time without affecting your bonus rate.
  • Open up to 10 Save accounts and get bonus interest on all of them, including shared Save accounts.
  • Get bonus interest on a combined balance of up to $250K across all your Save accounts.

Save Account (< $100,000)

  • Take money out at any time without affecting your bonus rate.
  • Open up to 10 Save accounts and get bonus interest on all of them, including shared Save accounts.
  • Get bonus interest on a combined balance of up to $250K across all your Save accounts.
4000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

High Interest Savings Account (< $250k)

    4001$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

    Online Saver ($1-$100k)

      0500$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

      Reward Saver

        000$product[$field["value"]]$product[$field["value"]]$product[$field["value"]]More details

        BU Savings Account

          Rates based on a savings balance of $10,000. Sorted by total interest rates. Refer to providers' websites for bonus rate conditions and for any applicable fees and charges. Rates correct as of July 3, 2022. View disclaimer.


          See also: Has COVID dealt a death blow to private health?

          With more than 40% of the population using private health insurance, the report says government and industry must work together to come up with a plan to salvage it.

          "There is still too much government red tape, mollycoddling, and created dependency, so the sector looks to government to fix its problems," report authors Stephen Duckett and Greg Moran wrote.

          "But government feels paralysed because if it changes the rules there will be losers who will shout loudly.

          "The industry needs to face up to its own problems."

          According to the report, those problems include "greedy" surgeons who charge patients "exorbitant fees", rorts in the prosthesis and device supply chain, unnecessarily long hospital stays, and insurers raising their premiums without giving members value for money.

          The report found 6% of specialists' services in hospitals are billed at more than twice the Medicare fee, accounting for 89% of patients' out-of-pocket costs. 

          See also: How to save money on your health insurance

          "Patients who have been paying insurance all their lives are understandably angry to get these surprise bills," the report said.

          "The industry should rein-in these ‘greedy’ doctors, and the Government should ensure patients know more before surgery about the costs they could face, so they get fewer nasty surprises after surgery."

          Ensuring private hospitals don't keep patients in hospital for longer than necessary could cut private health insurance premiums by 5%, while fixing the "pricing shambles" in the prostheses market could reduce the cost of hip and knee replacements and further reduce premiums.

          It also argued insurers should be forced to justify premium increases.

          "The Minister for Health should be more willing to reject premium-rise applications from insurers that can’t show they offer their customers good value for money."


          Photo by Diana Polekhina on Unsplash

          Latest Articles

          author-avatar
          Emma Duffy is Assistant Editor at Your Mortgage and  Your Investment Property Mag, which are part of the Savings Media Group. In this role, she manages a team of journalists and expert contributors committed to keeping readers informed about the latest home loan and finance news and trends, as well as providing in-depth property guides. She is also a finance journalist at Savings.com.au which she joined shortly after its launch in early 2019. Emma has a Bachelor in Journalism and has been published in several other publications and been featured on radio.

          Be Savings smart.
          Subscribe for free money newsletters.

          By subscribing you agree
          to the Savings Privacy Policy