MTAA backs AMA’s proposal for private health independent authority, but health insurance body sceptical

MedTech News: Reform of the private health sector and a new independent body are required to ensure the private health sector is sustainable and patients can access care they need, the AMA has argued in a discussion paper released yesterday.

The discussion paper has been released ahead of an AMA Private Health Insurance Summit at Parliament House in Canberra attended by insurers, hospitals, government representatives, peak bodies from the medical and insurance sector and consumer representatives.

A whole of system approach to reforming private healthcare proposes a new body — the Private Health System Authority — to bring the sector together and build consensus on reforms. 

AMA President, Dr Omar Khorshid, said the private health system is an essential pillar of the health system, providing almost 60% of elective surgery admissions.

“The system is critical to charting a course out of the COVID-19 pandemic and tackling the growing waiting lists for elective, but essential, surgery,” Dr Khorshid said.

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“Without immediate intervention reform will continue to be piecemeal and limited at best, with the real risk of ongoing conflict in the sector, all of which does nothing to instil confidence in policy holders and patients.”

Private Healthcare Australia CEO, Dr Rachel David, said “Health funds are strongly opposed to an additional regulator with enforcement powers. The current regulators act in the public interest, as opposed to vested interests. Further, duplicating the functions of the other PHI regulators would create an additional regulatory burden putting upward pressure on management expenses.

“If the Australian Medical Association is proposing a collaborative group, similar to PHAIC, that’s something we could consider as long as it didn’t again add an expensive administrative burden to the funds. More bureaucracy does not equal reform.”

MTAA CEO, Ian Burgess, told Health Industry Hub “MTAA has made the creation of a fit-for-purpose private health system authority part of our ‘7 Point Plan’* for strengthening Australia’s healthcare system. A new authority must address the drivers of ongoing premium increases, support the sustainability of the private health sector, and stop private health insurance from driving up the cost-of-living crisis.

“Consumers would be shocked to learn that while they’re struggling to put fuel in their cars or save for a home, insurance companies have been splurging even more money on themselves to the sum of $2.6 billion for ‘management expenses’, while also pocketing their highest ever profits of $2 billion – an astounding 107.8% increase on last year.”

Dr Khorshid added “The private health system prior to COVID saw falling membership and the AMA is concerned memberships will start declining again. There are increasing numbers of older, sicker members, fewer young policyholders and premium rises that are pricing families and young Australians out of the market.

“A new Private Health System Authority would help ensure a cohesive regulatory model by relieving the Department of Health of its conflicted role as a regulator and policy maker and it would incorporate new functions to fill gaps in the current regulatory environment.

“Under current arrangements no one has looked at the bigger regulatory picture to gauge the impact of ad hoc changes or balance the interests and needs of patients, day hospitals, private hospitals, private health insurers, medical device manufacturers and doctors.

“We have all said we are not trying to benefit at the expense of others, and all we want is patient-centric, clinician-led care that is safe, high-quality, and delivers value for the patient. We all agree on this, so now is the time to act.

“The authority would create a platform for everyone in the sector to move away from combative debates and work together under better regulation to deliver better outcomes for all. The AMA stands ready to support the sector to safeguard this essential pillar in our healthcare system,” Dr Khorshid said.

Submissions on the AMA discussion paper can be made until 31 August 2022. Read the discussion paper

*MTAA’s ‘7 Point Plan’ recommends the new authority adopt the following:

1. Force insurers to return 100% of COVID-19 profits to members,
2. Require insurers to pay out a minimum of 90% of their revenue to members,
3. Establish a Private Health System regulator to develop a reform agenda to increase sustainability and protect patients,
4. Refuse premium increases for insurers whose claims ratio is below the industry average, 
5. Prevent insurers from providing rebates for unproven treatments,
6. Standardise rebates for services across insurers to streamline administration and provide for certainty for consumers, and 
7. Hold an inquiry into the corporate and tax structures of insurers to identify opportunities to reduce management expenses.