Government announces private health insurance reforms
The Australian Government announced today a wide-ranging package of reforms to make private health insurance simpler and more affordable for Australians. In making private health insurance more affordable, the reforms aim to stem the tide of individuals and families opting out of private health insurance in preference for healthcare provided through the public health system. By way of example, the share of Australians who have private hospital cover insurance is now at its lowest level since 2012: 46.1 per cent of Australians have hospital cover and 55 per cent have extras cover.1
The package of reforms includes a variety of measures such as:
- measures to improve information to help consumers compare different insurance products more easily and shop around for a better deal, and improve consumers’ understanding of private health insurance and its value to them
- a measure to provide for improved support of people with mental illness
- a boost to the powers and resources of the Private Health Insurance Ombudsman to ensure consumer complaints are resolved clearly and quickly
- measures to improve the value of private health insurance for particular groups, such as young Australian (by providing for discounted policies for those aged under-30) and consumers living in regional and rural Australia (by covering travel and accommodation costs in some circumstances), and providing all consumers with an option to choose higher excesses and lower insurance premiums
- a reduction in benefits payable for some categories of care including medical devices listed on the Prostheses List and some natural therapies.
While these reforms aim to stem the flow of people out of private health insurance and bolster uptake in low health cost groups, such as those under 30 years of age, the removal of coverage for some natural health therapies from 2019 – estimated in an Australian Labor Policy Costing by Treasury to save around $50 million from the budget bottom line - may in fact lead to cost shifting to the public purse through increased Medicare consultations and interactions with hospitals.
The federal government proposes the following natural therapies be removed from all private health insurance products: Alexander technique, aromatherapy, Bowen therapy, Buteyko, Feldenkrais, herbalism, homeopathy, iridology, kinesiology, naturopathy, pilates, reflexology, Rolfing, shiatsu, tai chi, and yoga. Massage therapy will be retained. Chiropractic, osteopathy, Chinese herbal medicine and acupuncture are unaffected (rebates remain) as government regulated health professions.
Unfortunately, the Review of the Australian Government Rebate on Private Health Insurance for Natural Therapies does not reflect the evidence for some of these therapies, including herbal medicine, naturopathy, tai chi and yoga (along with most forms of exercise).
By way of example, there is considerable evidence of the effectiveness tai chi in preventing falls, with RCTs carried out throughout the world consistently demonstrating tai chi is effective in reducing the risk of falls and also in preventing falls. Researchers from the Institute for Aging Research of Harvard Medical School have worked for a number of years with residents at a Boston-based senior healthcare and housing organisation Hebrew SeniorLife. Their research shows that regular practice of tai chi reduces the risk of falls among older adults. Additionally, they found tai chi benefits both balance and mobility – it aids the muscular system, coordination, equilibrium, and the brain.2
Australia has an ageing population and the risk of falling and fall injury increases with age. More than one in three community dwelling people aged 65 years and over experience a fall annually. The rates of hospitalisation are high for falls, as are acute care costs.3,4,5 A study completed in NSW 10 years ago quantified the burden of injury associated with falls in individuals aged 65 years and over in the state in the 2006/07 financial year: the total cost of healthcare associated with fall injuries in older people in NSW in this period was estimated at $558.5 million.6
Providing a rebate for tai chi makes financial sense and cutting this rebate is an ill-conceived policy solution. Saving $50 million now will likely lead to much higher costs in the public health system and through Medicare. Further, exercise therapy is well evidenced to prevent development and exacerbation of many chronic disease including obesity, diabetes and cancer.
Australian private health insurers, while expressing broad support for the reforms announced, are yet to provide clear guidance on their response to the natural therapies reform proposed by the Government, primarily as there is widespread recognition that natural therapies remain highly valued by customers.
An increased and adjusted focus on preventive health measures is needed to guarantee the sustainability of the healthcare system and to deliver long-term benefits to both the community and government, and removing the rebate on the list of natural therapies shown is at odds with these goals.
1. Private Health Insurance Quarterly Statistics – June 2017. Sydney: Australian Prudential Regulatory Authority, 2017.
2. Mineo L. The balance on aging. Harvard Gazette – April 25, 2017.
3. Bradley C. Trends in hospitalisations due to falls by older people, Australia 1999–00 to 2010–11. Injury research and statistics no. 84. Cat. no. INJCAT 160. Canberra: AIHW. 2013.
4. Bradley C. Hospitalisations due to falls in older people, Australia 2006-07. Injury research and statistics series no. 57. Cat. no. INJCAT 133. Canberra: AIHW, 2012.
5. Bradley C. Hospitalisations due to falls by older people, Australia 2007-08. Canberra: AIHW, 2012. Report No.: Injury research and statistics series no. 61. Cat. no. INJCAT 137.
6. Watson W, Clapperton A, Mitchell R. The incidence and cost of falls injury among older people in New South Wales 2006/07. Sydney: NSW Department of Health, 2010.