Who pays for what when it comes to your medical bills?
A simple guide on who's responsible for healthcare costs
Over the last few weeks, you may have come across a few news articles talking about the senate inquiry into private health insurance. However, they tend to be muddled with jargon and data that doesn’t make much sense unless you work in the industry… or have a PhD in finance.
At nib, we believe that understanding private health insurance should be simple. So, we’ve answered some of the biggest questions you might have about the senate inquiry.
A senate inquiry happens when an issue or concern is identified by the government. The senate will set up a committee to investigate and report back on the topic, so that the committee can make a well-informed decision on how to resolve or improve the issue.
The inquiry asks anyone who is an expert on the topic, or is affected by it to make a ‘submission’. This submission is simply a document that could explain what the issue is, what the effect of the issue is or even offer recommendations for how to overcome it.
The cost of private health insurance is increasing faster than the average wage growth, making affordability a real issue for the average Aussie. There are a few reasons for this, including:
• Ageing population – Between now and 2050, the number of people aged 65-84 will more than double. The older you get, the more likely you’ll use health insurance for things like medical tests, surgery and treatments. The more people that use their health insurance, the higher the increase to premiums to cover those costs. • Expensive technology – Technology has impacted the medical industry significantly, bringing us advances like pacemakers, prostheses and stents. However, this technology is expensive and is a factor in premium increases.
The senate’s inquiry aims to examine how the private health insurance industry is regulated and how it can maintain and enhance its future contribution to Australia’s healthcare system.
We’ve put together a submission to the senate with our recommendations on how to make the healthcare system more cost and service efficient, deliver improved health outcomes, provide better value and transparency to customers and maintain its affordability.
To achieve this, we’ve put forward key recommendations including:
1. Trialling Medicare Select
Back in 2008, the National Health and Hospitals Commission recommended reorganising the relationship between the patient, the doctor or specialist and the organisation that funds the treatment (i.e. Medicare or the private health insurer).
Currently, when you visit a healthcare provider, part of the visit might be covered by Medicare, part might be covered by your private health insurer and you might be charged a ‘gap’ or ‘out-of-pocket’. “It is dysfunctional. No one payer has a full view of the consumer, and incentives to better manage and co-ordinate care are significantly blunted,” nib’s CEO Mark Fitzgibbon said about the current system.
With the Medicare Select recommendation, the government and insurers work as partners, so that when you need treatment, your insurer will cover the full spectrum of costs from GP visits and radiologists to hospital stay to outpatient specialist visits.
“In nib’s view, Medicare Select would promote cost efficiency, better use of scarce healthcare resources and give the insured more control over their own healthcare choices, in partnership with their Medicare Select provider,” Mr Fitzgibbon said.
2. Empowering patients
In the current health system, health professionals hold most of the power when it comes to the doctor-patient relationship. We want to flip this so that you have the power over your own health. We are asking the senate to put in regulations that enable private health insurers to share as much information as possible with policyholders – giving you access to the success rate of certain procedures and other patient’s reviews on doctors, hospitals and providers.
We’ve already helped launch Whitecoat - a TripAdvisor-style website that gives you access to more than 200,000 healthcare providers Australia-wide. You can easily search for a provider by their location and online reviews. You can also find out whether they accept on-the-spot HICAPS payments and for some, even book appointments online.
So far, Whitecoat has been focused on extras providers like dentists and physiotherapists. However, very soon our customers will be able to search for a medical specialist and be able to see whether they are covered for a certain procedure, how much the specialist charges compared to his or her peers as well as feedback on the specialist from other nib customers.
3. Introduce a ‘reversed’ Lifetime Health Cover loading
In addition to using the Lifetime Health Cover loading to encourage Aussies to take out hospital cover when they turn 31, we are recommending that the government provides an extra incentive, through discounts, to young people under 30 to purchase hospital cover earlier. We want young people to be incentivised to take out private health insurance by seeing it as valuable and well-worth their investment.
4. Attract a younger demographic
We also recommend that there be a focus on wellness and condition programs – not only to make private health insurance more appealing to the young and healthy, but with the wider goal to help prevent people from getting sick in the first place.
5. Reform of the broader industry
We are encouraging the government to look at the broader health industry as part of this inquiry, including the rise in costs of doctor’s appointments, prostheses and hospital visits – all of which are increasing well above the average inflation prices.
The senate committee will deliver its findings later this year, so stayed tuned for more. Struggling with some of the private health insurance jargon you’ve been seeing in the news lately? Check out our article - Jargon-busting the most common private health insurance terms.