Election cash splash won’t save a crumbling private health system

Politicians are addicted to headline-grabbing, big-ticket pledges during election campaigns. It’s political theatre that more often than not fails to address systemic issues.

Labor’s $8.5 billion and the Coalition’s $9 billion promises to prop up bulk billing may sound generous, but they’re little more than expensive window dressing. Despite the fanfare, most GPs are clear: it won’t change their billing behaviour. Throwing billions at a broken system without tackling the root cause is political posturing, not reform.

The Australian Private Hospitals Association (APHA) has sounded the alarm on a deeper crisis that short-term spending won’t solve.

“As more private hospital closures loom, whoever forms government after Saturday will likely respond by pushing more public patients through private hospitals,” APHA CEO Brett Heffernan warned. “Our discussions with governments and opposition parties show universal recognition of the plight of public patients on waiting lists and the capacity of private hospitals to meet this need.

He added, “For forward-planning and workforce considerations, to be effective this will need to be a commitment over years, not months. But this is not a fix for the funding crisis.

“The next Federal Government must grasp the critical need to reform the funding mess that allows insurance companies to bank record profits and exorbitant fees while dictating inadequate pricing to hospitals.”

Nowhere is this dysfunction more glaring than in maternity care. The sector is collapsing under the weight of outdated funding structures, a shrinking birth rate, and chronic workforce shortages.

“Health insurance companies only include maternity at the Gold level of cover. Despite holding Gold cover, often for years, mothers-to-be are shocked to discover they are not covered for an obstetrician, meaning they can be up for $10,000 in out-of-pocket costs. Faced with these costs, it’s not surprising people go public,” Heffernan explained.

The Australian Medical Association’s (AMA) Federal Election Health Report Card called out the vacuum of serious policy on private health.

“We have seen major issues in the private health system, with private hospitals closing or restricting services; declining rebates as a proportion of premiums, and frequent funding disputes between insurers and hospitals,” said AMA President Dr Danielle McMullen.

“Current regulatory and legislative frameworks are not fit-for-purpose. The AMA has been calling for a new independent authority that would create a platform for all the key players in the sector to come together and make once-in-a-generation reforms.”

Meanwhile, private health insurers are thriving. The Australian Prudential Regulation Authority (APRA) reports insurers have banked over $5 billion in profit over the past three years. On top of that, they pocket $3.5 billion a year in opaque “management fees.”

But while profits soar, hospitals are being bled dry. Over the same three years, private hospitals were underpaid by more than $3 billion for services already delivered. It’s a cash grab that’s hollowing out the system.

“So whether you have more babies to deliver or extra staff to deliver them, when you’re being underpaid for the services you provide, then delivering 100, 1,000 or 10,000 babies each year doesn’t help. In fact, you are just compounding the funding shortfall.

“The good news is it’s fixable and fixing this funding crisis doesn’t cost a cent. It doesn’t have to cost taxpayers and patients nothing. It does, however, require a bit of political will to make the insurers pay their way,” Heffernan stated.

Yet political action has been patchy and reactionary. A Monash University study warns that continued closure of private maternity wards could cost taxpayers $1 billion a year. And still, the Federal Government’s solution? A band-aid: $16 million to plug gaps in Hobart and Gosford.

“Naturally, local communities will welcome the funding. But wouldn’t a proactive approach to fixing the funding mess in the first place have been a better way to go?” Heffernan asked.

Only recently, in the context of an election campaign, has Health Minister Mark Butler espoused restoring the funding ratio to private hospitals, noting of insurers: There has been a structural shift of where the money is going in the system. There is a shift downwards for private hospitals. There has been a shift up in profitability and management expenses of insurers. There needs to be a lift in the benefit payments ratio.

The rhetoric may finally be catching up, but detail is sorely lacking. Heffernan said “Better late than never. But there are scant details on how or what ratio.

“When asked in a recent media interview to match this pledge, Shadow Federal Health Spokesperson Anne Ruston dodged the issue. More alarmingly, she did so parroting the health insurance industry’s talking points that they cannot afford it. Codswallop! Clearly, they can and without increasing premiums.”

In reimagining healthcare across the entire patient journey, Health Industry Hub^TM is the only one-stop-hub uniting the diversity of the Pharma, MedTech, Diagnostics & Biotech sectors to inspire meaningful change.

The Health Industry Hub^TM content is copyright protected. Access is available under individual user licenses. Please click here to subscribe and visit T&Cs here.