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Ley launches health insurance overhaul

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The AMA has been appointed as a key adviser to the Federal Government on reforms aimed at boosting competition in the private health insurance industry and reining in premium hikes.

An AMA representative will sit on the Private Health Ministerial Advisory Committee (PHMAC), which has been tasked by Health Minister Sussan Ley with overseeing the implementation of reforms including the introduction of a simplified ratings system for health policies and regulatory changes to reduce the upward pressure on premiums.

Ms Ley announced the reforms earlier this year after a Government-run survey identified widespread consumer dissatisfaction with private health insurance, including skyrocketing premiums, confusing and complex policies, arbitrary changes to cover and inadequate disclosure of exemptions, limits and out-of-pocket costs.

“Private health insurance is a fundamental part of our national health system, but the majority of the 40,000 consumers who responded to last year’s survey told us the current system is frustrating and didn’t offer good value for money,” the Minister said.

The Government announced its reform plans, including a three-tier system to rate cover, a mandatory minimum level of cover, standardised definitions for medical procedures, simplify billing and tougher disclosure rules, after the AMA released a Report Card on the private health industry.

The Report Card showed many insurers offered ‘junk’ policies that only covered public hospital treatment, and identified big variations in the benefits paid for similar procedures, in many instances leaving policy holders to pay large out-of-pocket costs.

AMA President Dr Michael Gannon has accused the major health funds of putting the pursuit of profits before the interests of patients.

In a speech to the National Press Club last month, Dr Gannon said that, “increasingly, we are seeing behaviour by large private health insurers that reflects that their ultimate accountability is to their shareholders”.

The AMA President warned that insurers were trying to assert an ever-greater role in the conduct of clinical care, to the detriment of both patients and doctors.

“If the actions of the funds continue unchecked and uncontested – especially their aggressive negotiations with hospitals and their attacks on the professionalism of doctors – we will inevitably see US-style managed care arrangements in place in Australia,” he said.

Signalling the seriousness of the Government’s intent to reform the private health insurance industry, Ms Ley has appointed experienced public servant Dr Jeffrey Harmer to Chair the PHMAC.

Dr Harmer, a former Departmental secretary who has been involved in several large scale government reviews including the Henry tax review and the 2008-09 Harmer review on the adequacy of the age and disability pensions, is considered a strong choice for the role.

PHMAC’s work will be complemented by a separate Government initiative to cut down on the amount private health insurers pay for prostheses.

The Government regulates the price of a wide array of medical devices from pacemakers and artificial knees to orthopaedic screws, and concerns have been raised that prices for medical devices in Australia are too high. In addition, health funds have complained that they are being charged substantially more than public hospitals for such devices and prostheses, and have blamed to discrepancy for helping drive the relentless rise of premiums.

Ms Ley has announced that a revamped Prostheses List Advisory Committee will be tasked with improving the transparency of medical device pricing, making prostheses more affordable, and reducing duplication in official device approval processes.

The Committee will be chaired by University of New South Wales Professor of Medicine Terry Campbell, who is also Head of the Department of Medicine at Sydney’s St Vincent’s Hospital, and has been a long-serving member of the Pharmaceutical Benefits Advisory Committee.

Adrian Rollins