CEO roundtable to tackle private health deadlock

Australia’s largest medical indemnity provider representing 95,000 doctors, Avant Mutual, is stepping into the private healthcare policy battlefield, convening 36 of the nation’s health leaders at Parliament House today.

The roundtable brings together CEOs, presidents and board directors from medical colleges, private hospitals, patient groups and health insurers, in an attempt to break the policy and funding deadlock between government, insurers and private hospitals – a stalemate that is steadily eroding the value of private healthcare and leaving patients worse off.

At the heart of the debate is Avant Mutual’s commissioned report, Protecting Australia’s Dual Healthcare System, which puts a dollar figure on the value of the government’s $8 billion private health insurance (PHI) rebate. The rebate, the report argues, is one of the most cost-effective levers in health policy saving taxpayers up to $1.25 in public hospital costs for every $1 spent. Yet, its true value has been quietly hollowed out, declining 19% since 2014 as it failed to keep pace with medical inflation.

That erosion is rippling through the system. The report found that more than 200,000 Australians have been forced to downgrade from Gold-level private cover – which guarantees access to essentials like maternity and psychiatric care – to cheaper Silver or Bronze policies riddled with exclusions and higher out-of-pocket costs.

This so-called “tier slide” is not just an insurance problem. It has sparked a chain reaction: private maternity services closing, pressure piling onto public hospitals, and waiting lists blowing out.

Avant’s Chief Medical Officer, Professor Steve Robson, stated “The rebate is one of the most effective health investments the Government makes, saving taxpayers more than it costs yet its erosion through inflation has left Australians downgrading their cover, putting pressure on private hospitals and driving up public hospital waiting lists.

“The evidence is clear that as the rebate erodes, private health insurance becomes less affordable amid broader cost-of-living pressures. Since 2018, 18 private maternity services have closed, mental health beds have been reduced, and queues in public hospitals continue to grow.”

“A smaller rebate has the potential to drive millions of Australians out of private health insurance. Without that insurance, fees paid to hospitals and day surgery facilities would be unaffordable for most people,” Professor Robson added.

However, the counterarguments are equally sharp. University of Melbourne researchers recently found that boosting private health insurance uptake barely dents public hospital waiting times, with average delays reduced by a negligible 0.34 days.

“The practical significance of this effect is limited, if not negligible. Instead, the government should consider other approaches, for example, investing in innovative care delivery and funding models, strengthening community health services and community-based care, chronic disease prevention in primary care, or even purchasing services directly from private hospitals,” the authors wrote.

Adding to the debate, a systematic review from the Australian National University exposes a widening gap between health policy rhetoric and patient realities. Private patients may enjoy more choice of specialists and private rooms, but are often stung by unpredictable out-of-pocket costs and exclusions that expose the hollowness of “premium” health insurance policies.

Out-of-pocket costs now make up 14% of total health expenditure, and when combined with PHI premiums, Australians are shouldering 26% of the nation’s healthcare bill – making Australia the 12th highest among OECD nations. Meanwhile, exclusionary hospital policies are fast becoming the norm. In 2019, 57.7% of hospital cover was riddled with exclusions; by 2025 that number has ballooned to 67.6%, leaving 8.6 million Australians covered in name only.

The Avant Mutual roundtable, led by Professor Robson with contributions from government perspectives from Dr Mike Freelander MP, Chair of Standing Committee on Health, Aged Care and Disability and practising paediatrician, and Senator Anne Ruston, Shadow Minister for Health and Aged Care, will unveil Avant’s economic report and outline a reform framework built around six principles for policy reform.

The report modelling noted that abolishing the $8 billion PHI rebate could see 8 million Australians drop or downgrade cover, costing governments $3.5 billion more each year. Even partial removal would trigger 3.7 million downgrades, costing $1.3 billion more annually. Maintaining the rebate would actually save $0.2 billion annually, while restoring it to original levels could save $0.5 billion annually or $4.6 billion over the next decade.

Despite the gravity of the debate, the roundtable’s guest list left some glaring omissions, including senior executives from major private health funds such as Bupa, Medibank and HCF, along with Australian Private Hospitals Association (APHA) CEO Brett Heffernan.

Professor Robson said, “We want to highlight interdependence of public and private sectors and challenge the overly simplistic arguments about the relationships between private hospitals and insurers.

“Instead of engaging in the recent conflict in private healthcare debates, we want to focus on the bigger picture that includes the value of the rebate, the appeal of private health insurance, structural challenges in the sector and most importantly the perspective of patients who want accessible, affordable, and high-quality care.

“We look forward to working with the Government and all stakeholders to ensure that all Australians can continue to have affordable, safe, just access to the healthcare services they need.”

With the government’s own Private Health CEO Forum and other reform recommendations already on the table, the question remains: will Avant’s roundtable truly shift the dial, or will the policy and funding stalemate continue to trap the private healthcare system in gridlock?

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