Private health insurers accused of hoarding billions as medtech industry supports calls for independent oversight

MedTech & Diagnostics News: The Medical Technology Association of Australia (MTAA) has thrown its weight behind the Australian Medical Association’s (AMA) proposition for a Private Health Insurance Authority. The call comes in response to the release of new data from the Australian Prudential Regulation Authority (APRA), revealing that insurers have benefited significantly from the ongoing reduction in benefit levels for medical devices on the Prescribed List, totalling over $3.5 billion in adjusted inflation since 2017.

MTAA CEO, Ian Burgess, underscored the importance of acknowledging the declining average benefit levels on the Prescribed List (previously Prostheses List), emphasising that the government’s ongoing reforms have led to substantial savings. Despite an increase in medical device utilisation, the average benefit has continued to diminish, indicating that consumers are receiving enhanced value for each medical device incorporated into their treatment plans.

“In the last 12 months we have seen the average PL benefit – which is the amount insurers are required to reimburse on behalf of their patient – drop by 4%. This is a continued trend downwards, meaning the corporate health insurance industry is continuing to save big on medical devices in Australia,” stated Mr Burgess.

He further noted, “Unfortunately, the data we’re seeing shows those savings aren’t being passed on by insurers to consumers to help with the cost-of-living. Instead, they’ve been spending those savings on themselves through management expenses like executive bonuses and premium office space.”

Professor Stephen Robson, President of the AMA, stressed the need for an impartial entity to oversee the intricate dynamics between insurers, private hospitals, and medical device manufacturers. “Currently, the landscape appears to be a battleground of competing interests. In the midst of conflicts, it’s very hard to navigate a path that’s equitable. We’ve got to put the patient at the centre of all this. Introducing an independent arbitrator, a private health system authority, is long overdue and hopefully will put a bit of sense back into things,” he stated.

APRA data has unveiled a stark disparity between the growth in management expenses of private health insurers, which has exceeded growth in Prescribed List benefits by over 250%. Insurers have directed a total of $2.6 billion towards internal expenditures, reflecting a 12.4% increase, as opposed to supporting financially burdened consumers. This pattern is magnified by insurers’ record-setting profits, which have doubled to an astounding $3 billion.

Despite these findings, the private health insurance sector’s lobbying efforts have attempted to distort the figures, asserting that medical technology makers have not substantially contributed to insurers’ savings. This assertion, however, is contradicted by public APRA data, indicating that the accumulated savings for the last financial year, based on the decreased average benefits per item on the Prescribed List, stand at just over $89 million when adjusted for inflation. In fact, 47% of PL items had cuts in benefits the last financial year

Mr Burgess condemned the corporate health insurance industry’s misinformation campaign, labelling it a deliberate attempt to conceal their failure in passing on substantial savings to consumers. This very pattern of evasion and misinformation underscores the necessity of MTAA’s endorsement of the AMA’s call for the establishment of an independent Private Health Insurance Authority.

“It’s time for the corporate health insurance industry to be held to account. There is absolutely no excuse for them to be pocketing the savings meant for consumers, particularly during this global cost-of-living crisis. If insurers won’t look out for consumers, it’s time government put in place an authority that will,” concluded Mr Burgess.

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