Press Conference at Holmesglen Private Hospital
Transcript of Minister for Health, Greg Hunt's press conference at Holmesglen Private Hospital to announce private health insurance reforms on 13 October 2017.
The Hon Greg Hunt MP
Minister for Health
13 October 2017
Topics: Announcement of private health insurance reforms
Well, good morning everybody. I’m delighted to be here at Healthscope’s new Holmesglen Private Hospital.
Dr Raja Barua, head of the emergency department here, out with Dr Rachel David, from Private Health Australia, Matthew Koce, representing the small insurers, the leaders from Healthscope and from our private health insurance sector.
Australians value and believe in private health. It’s about peace of mind. It’s about giving them coverage.
It’s about giving them choice, but private health is something which does have its pressures, so today I am delighted to announce that the Government will be implementing the largest private health insurance reforms in 15 years, and these reforms are based around a series of principles.
Firstly, affordability, taking the pressure off premium changes, in particular, providing discounts of up to 10 per cent for young people under 30.
It’s about information and simplicity, ensuring that all Australians are able to understand the impact of their policies, what they are covered for and what they aren’t covered for. The outcome we want here is very clear, no surprises, so as in the future people do not have surprises as to what comes when they are hospital.
And thirdly, increased mental health coverage. We know that there are four million Australians each year who have some form of chronic or episodic mental health condition.
Almost every family is touched, and Raja was telling me that, for young people, one of the largest sources of admissions within the emergency department is a mental health challenge, a crisis, and what we want to ensure is that there are no longer waiting times for upgrading to ensure that there’s mental health coverage.
This is a critical driver of why people take up private health insurance, and it’s fundamental to their ability to have peace of mind and to seek that support when they need it.
To give you a very brief summary of the changes, we are taking a billion dollars of costs out of the private health insurance sector through an agreement with the Medical Technology Association of Australia.
We’ve reached agreement with the prostheses and device makers to take a billion dollars of costs out of their products, and that’s in return for faster access to market for new devices, for new prostheses.
So if you’re thinking of hips or knee replacements, if you are thinking about cardiac devices or so many other devices, from patients’ perspective, newer devices will be available more quickly, and that means better patient care.
In return, there will be a billion dollar reduction which the private health insurers have guaranteed in writing they will pass on in full. That’s how we make the savings.
In addition to that, by bringing more young people in, that lowers the average cost of premiums. It’s great to have young people in.
It’s better coverage for them, as we saw with people such as Joshua and Margie, that their costs will be lower in the future, in the case of Margie, in particular, and this allows us to bring these reforms in.
At the same time, we will be putting in place reforms that will allow people to upgrade with no waiting time for mental health coverage or improved mental health coverage.
These are critical. Ultimately, of course, it’s our job to oversee the system, and that’s why the Private Health Insurance Ombudsman will have increased capacity to investigate individual claims, but we want to work in partnership with the sector, and this is a package that will give long term stability to private health insurance, but most importantly, for pensioners, for lower income families, for young people, it’s about reducing pressures on price, increasing access to mental health coverage, and improving the understanding and simplicity of our private health insurance products.
From an emergency perspective, this will be a great incentive and will be of great help to the patients and their families who present with acute psychiatric illnesses to emergency, because now they’ll have an outlet and we’ll be able to get them seen at a psychiatric facility sooner than later, especially if they don’t have to wait for their- to serve the waiting period. So it’ll take a humongous pressure off the emergency departments, as well as the community psychiatric services. I think it will definitely be a big bonus for all the emergency departments and the hospitals in general.
Thank you, Minister. Australia’s health funds have worked with the Federal Government, with doctors, hospitals, the Healthscope that owns this hospital here today, and consumers over the last two years on a package of measures to improve the affordability, participation and value of private health insurance.
Why? Because the sustainability of this sector is critical to Australia’s whole health system. Private health covers two-thirds of elective non-emergency surgery, and more than half of all admissions for mental health to hospitals like this.
So we do care about what happens in private health, because it really matters to Australians, not just those with health insurance, but those who don’t have it, who might need to go on a waiting list in a public hospital.
So, we’ve all had to make compromises. All the stakeholders in private health have had to make compromises, but the result is a package of measures that looks after the consumer in private health, helping them choose and use their health insurance at an affordable price. And for that, I will thank the Minister and his Federal Government colleagues, as well as my colleagues in Private Health Australia, the CEOs of our member health funds in bringing us to this point.
Great. Happy to take any questions.
What makes you think under-30s will want to sign up for this? They’ve got a lot of pressures as it is, [inaudible] to buy a house and other things, so why?
They do. It’s absolutely true that there are cost pressures for people right across the spectrum, but particular for under-30s.
That’s why we’re offering the discount, and it’s not just up to a 10 per cent discount whilst they’re under 30.
They’ll then keep that right through until they’re 40, at which point it will phase out. So, it’s a very powerful financial incentive.
And then coupled with the fact that we are ending the waiting periods for upgrading to mental health cover, or upgrading the quality of your mental health cover, those things together make this a very important package for young people.
Do you think 2 per cent a year is actually going to be enough for young people, though, as an incentive?
Well, the way it works is that for each year below 30 that you take it up, you get an additional 2 per cent. So, it’s discounts of up to 10 per cent, and then they’ll continue right through until you’re 40.
So somebody who comes in at 25 will hold their full discount until 40, and some discount until 44. So, almost 20 years of discount for early entry is a very powerful financial incentive. It makes a lot of sense.
And when will these changes be brought into effect?
So the changes will be phased in on 1 April 2018 and 1 April 2019. The really important thing here is this is a package which will deliver reduced pressure on premiums over a series of years.
We know that there will be further savings to come in back in 2020, because we have agreements with the device makers, the prostheses makers, hips, knees, cardiac devices, for not just one round, but two rounds of premium reductions, and I do want to do something slightly unusual here, and that’s to single out one of my key staff, Alex Caroly, who has worked in an amazing way with the device makers and the private health insurers, and I’m very blessed to have that support, but the device makers have been tremendous.
They get faster access to market, the public gets faster access to new devices, and the premium holders have reduced pressure on their premiums.
Minister, how will you hold the private insurers to account to pass on the discount?
Well we’ve already had a guarantee in writing from both Matt Koce, representing the smaller insurers, Matt, come in and join us, and Rachel, in terms of the premium reductions or the pressures being passed through.
And we also, ultimately, have two other mechanisms, one is the Private Health Insurance Ombudsman, but we want to work in partnership with the sector, and ultimately, there’s a Federal Government power to reject any premiums if they aren’t fully passed through.
Yeah, look, hirmaa represents 24 not-for-profit, member only, community-based health insurers. Our funds all exist only for one purpose and that’s to serve policy holders. They don’t make profits for shareholders. They return around 90 cents, 90 cents, in every premium dollar back to policy holders in benefits.
What’s so good about this package that the Minister has announced today is that it improves simplicity, it improves affordability and it will improve value for money for consumers and that can’t be missed.
With 90 cents in every dollar going in benefits, the only way to really improve affordability is through the health supply chain and that’s what this does.
We’re getting savings through prostheses, $188 million, that equates to $34 a year for every policy. There’s significant and real savings that are tangible and they will be passed on to consumers, it will improve affordability.
And the Minister is also doing work through the Prostheses List Advisory Committee that is going to improve affordability into the long term through mandatory price disclosure, reference-based pricing and a number of other things as well.
So this is really positive reform. It’s the biggest reform we’ve seen in many, many years and it’s going to deliver real and tangible benefits for consumers and hopefully we’ll see more people take out private health insurance because private health insurance is the best way to get fast, high quality access to care when you need it. It provides outstanding piece of mind.
In terms of the question about the Prostheses List, the savings will be returned, every dollar of those savings will be returned to consumers and the documentation in our premium round process which is overseen by the Department of Health and the Australian Prudential Regulation Authority or APRA, has detailed this and how it will be done.
So there is a paper trail that we will abide by that will show how every dollar of those savings is passed on, so consumers can be reassured that they will benefit from appropriate pricing of medical devices.
Great, thank you very much. Well done.
What about concerns about junk plans?
Oh look, we are making steps to ensure that Rolfing, Reiki, reflexology are not subject to a Commonwealth rebate.
It will still be an option for the private health insurers to provide that coverage but on the medical advice of the Commonwealth medical authorities, Rolfing, Reiki, reflexology won’t be receiving the rebate. So that changes that.
One thing we won’t do though is Labor’s plan to abolish basic coverage which would remove the choice for pensioners and lower income families of their doctor in public hospitals.
Taking away the choice of specialists in public hospitals that Labor is proposing is terrible policy and something which we reject and would also lead to a 16 per cent increase in the cost of premiums and that would be a hammer blow to private health insurance and to waiting lists in public hospitals.
Okay, thank you.