Should private health insurers face scrutiny for soaring profits while patients foot the bill?

MedTech & Diagnostics News: In a clash of interests, the Medical Technology Association of Australia (MTAA) has once again urged for heightened transparency and regulatory controls on corporate health insurers, emphasising the need to ensure that cost savings are translated into tangible benefits for consumers. Simultaneously, Private Healthcare Australia (PHA) has pointed to the inflated prices of ‘generic’ medical devices as a significant factor contributing to the challenges faced by health insurers.

As private health fund membership reaches an all-time high, with over 14.73 million Australians opting for private coverage, concerns arise about the escalating costs and the impact on premium affordability. The surge in membership over the past 14 quarters is attributed to the persistent long waiting lists at public hospitals.

Data released by the Australian Prudential Regulator Authority (APRA) reveals that reforms in the Prescribed List (PL), formerly known as the Prostheses List, continue to yield substantial savings for private health insurers. Average benefits paid for medical devices have decreased by 2% in the year to December 2023 and a noteworthy 14% since the initiation of PL reforms in 2017.

Ian Burgess, CEO of MTAA, emphasised the positive impact of the PL reforms, stating “The MedTech industry has consistently delivered significant savings to health insurers, totalling an estimated $2.4 billion since 2017. Corporate health insurers, however, continue to see record profits during a cost-of-living crisis, paying out less to their customers.”

Mr Burgess expressed concern about the decline in the proportion of private health insurance premiums returned to customers, dropping from 87% to 80% in the last four years. He stated “At the same time, the number of policies with exclusions has increased, now encompassing two-thirds of all policies.”

Dr Rachel David, CEO of Private Healthcare Australia, defended health funds by directing the blame at the inflated prices of ‘generic’ medical implants and surgical supplies. She said “It remains a major factor pushing up costs for heath funds and impacting premium affordability. Furthermore, the number of medical device claims per surgical procedure is continuing to grow disproportionately as a consequence of the sales and marketing activities of the multinational suppliers of these items.”

PHA has proposed several policy measures, including the introduction of a Code of Conduct to monitor the sales and marketing activities of medtech companies, aligning it with the level of compliance we see with the pharmaceutical industry. It also advocated bringing Australian prices of ‘generic’ medical implants and surgical supplies in line with global market prices and promptly removing low-value and harmful medical devices and services once supporting clinical evidence is available.

Mr Burgess shed light on what the medtech sector believes to be the root cause of cost pressures, stating “The real cost pressure for corporate health insurers is the $3 billion they spend on themselves in management expenses.”

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.