Health Fund Industry Body Must Accept Failure – 29 August 1996

“The Australian Health Insurance Association (AHIA) which represents 43% of the private health insurance industry, must admit that its continued support for the so-called “reforms” delivered by the Lawrence Health Insurance Legislation has backfired”, Mr Stephen Milgate, spokesman for the Australian Doctors’ Fund, said in Sydney today.

“The Australian Doctors’ Fund has continued to call for the repeal of the Lawrence Health Insurance Legislation because it can only deliver less choice and higher premium levels to health fund contributors driving them out of the funds. This is exactly what is now happening”.

Health funds are required to trade profitably and recent cost increases driven by changes resulting from the Lawrence Federal Health Insurance Legislation (which the AHIA fully supported), are the main reason for the need for price rises.

Spokesman for the Australian Doctors’ Fund, Mr Stephen Milgate said that “the AHIA had worked very closely with Dr Carmen Lawrence and the Health Department to draft the very legislation known as the Australian Health Insurance Reform Amendment Act (Lawrence Health Legislation) that is now significantly contributing to higher health insurance premiums to health fund contributors”.

“Doctors have continued to oppose the Lawrence Legislation because they believe it will deliver US style Managed Health Care and because it won’t work”.

“The Lawrence Legislation, currently being reviewed by a Senate enquiry, held out the big carrot of 100% of no-gaps cover for hospital and medical costs believing this would be the salvation of private health insurance. It also required thousands of individual contracts with health funds, hospitals and doctors”.

“So far the 100% no-gaps hospital cover has only jacked-up health fund costs and failed to attract sufficient numbers of new contributors into the funds. It has backfired as predicted”. “The dream is dying and the AHIA is very red-faced”.

“The AHIA instead of admitting the consequences of this disastrous policy and seeking to reverse it, is now blaming doctors and private hospitals for cost increases. This is despite the fact that doctors fees account for only 8% of all expenses paid by health funds and despite the fact that private hospitals have been contracted to health funds at fixed prices”.

“Now the Federal Government incentive package to lure people back to private health insurance (by providing a rebate – carrot, or an increased Medicare levy – stick) is in jeopardy because of this failed policy devised by the AHIA and Dr Carmen Lawrence”.

“The Lawrence Health Insurance Legislation is not a stable platform on which the Coalition can build its plans to grow the private health sector”, Mr Milgate said.

“There is only one way forward. The Federal Government must repeal the Lawrence legislation and open up health fund competition to ensure a wider choice of low premium packages. Some health funds are already starting to provide this type of product which the Australian Doctors’ Fund supports.”

“Ultimately, Australians will have to decide whether they want affordable private health insurance with some excess when they make a claim or a bells and whistles health insurance product that they increasingly won’t be able to afford.”

“The Australian Doctors’ Fund believes that the Federal Government must move quickly to provide incentive to Australians to establish their own health savings accounts that will cover those out-of-pocket gaps and expenses that are an inevitable part of keeping health insurance affordable.”

“There is only one way forward, new legislation that repeals the old Lawrence Health Insurance Act and allows for new products such as Medical Savings Accounts whilst at the same time outlawing any form of US style Managed Health Care.”