No More Bandaids For Private Health Care – 8 March 2001

Proposed legislation to empower the federal health minister to prevent health funds from increasing their premiums is the latest attempt to prop up bad health policy in private health care, said Mr Stephen Milgate, executive director of the Australian Doctors’ Fund.

“The economic reality is that price fixing may delay but will not stop the rise of health fund premiums and is simply an admission that pumping $2.3 billion dollars into the health funds has not made any sustainable difference to the affordability of private health cover,” said Mr Milgate.

“The Australian Health Insurance Association (AHIA) has been allowed to dictate private health care policy to both Labor and Coalition governments. They have demanded that health funds be given power to run the private health system and that the taxpayer subsidise their businesses to the tune of $2.3billion per annum.”

“In the last financial year health funds made $344 million in profits – 1.6 times the previous highest profit and next year experts are expecting profit levels to be three times as high as this year,” said Mr Milgate.

“Legislation (introduced in 1995 by the Labor Government) supported by Dr Wooldridge, has given health funds the power to price fix private hospitals (take my price or go broke) and private hospitals in turn are supposed to treat patients to the health funds’ price.”

“Despite this legislative power the Australia Institute reports that private health funds are now receiving more budgetary assistance than the mining, manufacturing, and primary agricultural production industries combined.”

“Instead of being better for “the consumer” this system, known as managed competition, has meant dramatic cost cutting in private hospitals, meaning less nurses, shorter stays, selective caseloads, the closure of private Accident and Emergency facilities, and difficulty in some hospitals being able to admit private patients,” said Mr Milgate.

On top of this health funds are restricting the number of hospitals where reimbursement of full benefits is available. MBF has ‘networked’ only around 50% of private hospitals on NSW to date (80 out of 150 according to the MBF website).

Dr Bruce Shepherd, Chairman of the Australian Doctors’ Fund, said “Governments of all persuasions are not prepared to face the fact quality health care is expensive. One episode in hospital can wipe out the equivalent of a lifetime of health fund premiums. Price fixing is not the answer”

The Australian Doctors’ Fund calls for reform of unworkable competition regulation in heath care to:

  1. Abolish confidential contracting and allow a system whereby health funds, private hospitals, and medical associations can publish schedules of fees and benefits;
  2. Allow all parties within the private health care system to group negotiate without fear of a $10,000,000 fine from the ACCC.