dr rachel david - private health care australia - changing the policy settings for phi – can...
TRANSCRIPT
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HEALTHCARE REFORM: PRIVATE HEALTH INSURANCE
Dr Rachel DavidChief Executive OfficerJuly 2016.
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ABOUT PHA AND PHI .
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PRIVATE HEALTHCARE AUSTRALIA
3
19 96%Private Healthcare Australia is
the Australian private health
insurance industry’s peak
representative body
Major health insurance funds of the industry on membership
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PRIVATE HEALTH INSURANCE IN AUSTRALIAPublic health, public benefit
4
33 13.4 $18.35competing health insurance
funds
Australians (55.8%) rely on
PHI for treatment when they
need it
BILLION
in annual benefits paid to
members
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THE HEALTH FUNDS
Provide:
INSURANCE REIMBURSEMENT SERVICES
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THE ISSUES .
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PRIVATE HEALTH INSURANCE IS UNDER UNSUSTAINABLE COST PRESSURE
10
Hospital costs
7.6%Medical specialist gap cover
7.1%
Medical devices
8.9%Allied health reimbursement
6.3%
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8.00%
5.90%
4.30%
8.00%
4.70%
5.80%5.59%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
Public Hospitals Private Hospitals Medical Prostheses General Treatment All PHI 2016 Weighted
Average Premium
Increase
BENEFITS VS PREMIUMS (2015)
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THE EXTERNAL ISSUES
12
Increasing utilisation by fund
members relating to ageing and
chronic disease
Erosion of PHI rebate due to
means testing & indexation
Technology
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HEALTH COSTS VS PREMIUM COSTS
6.5%
Public hospital
agreed funding
increase
5.6%
Average
Increase in cost
of health fund
premiums
8%
Increase in
cost of health
services
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WHERE IS THE MONEY COMING FROM?
Health funds are becoming leaner
PHI management expenses are down to 8.5% comparing well with general insurance and other industries
This is 25% less than in 2008, and has reduced from over 13% in the year 2000.
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VALUE FOR MONEY? .
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83
87 87
8485
84
78
82
8081 81
82
70
80
90
2005 2007 2009 2011 2013 2015
Hospital Extras
Hospita
l
Extras
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17
Top 10 high claims paid by PHI Private Healthcare Australia - Annual High Claims Survey, Calendar Year 2014
Rank Total Benefits Paid Description
1 $565,346 Prematurity of infant
2 $523,127 Biliary pancreatitis
3 $399,400 Benign tumour of pituitary gland
4 $380,653 Bipolar disorder
5 $374,521 Gallstone of bile duct
6 $372,529 Mitral stenosis
7 $369,172 Biliary pancreatitis
8 $368,484 Cancer of gallbladder
9 $362,036 Intestinal ulcer
10 $338,925 Prematurity of infant
VALUE FOR MONEY?
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Selected Episodes: Proportion Performed in Private Hospitals (AIHW)
PRIVATE SECTOR CONTRIBUTION
18
82% 80% 72% 70%Mental health
treatment, without
ECT, same day
Knee procedures Complex middle
ear infection
Lens procedures
65% 64% 57% 55%Cancer therapy(Chemotherapy)
Other major joint
replacement & limb
reattachment
Hip replacements Major procedures
for malignant breast
conditions
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PUBLIC HOSPITAL WAITING TIMES
Perception versus reality
FACT:
Average public elective waiting
times have more than doubled
since turn of century
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OVERNIGHT PATIENTS
of all overnight patients are staying in
private hospitals
Implication: If PHI levels fell to around pre-2000 levels,
Australia would need at least 8% extra public hospital
beds…plus more for population growth.
42%
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TIMELINE: PHI REGULATION IN AUSTRALIA .
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REGULATION 1996 – 2001‘Three pillars’ stabilised PHI membership: taking the pressure off public hospitals
Lifetime Health Cover Medicare Levy Surchage 30% rebate on premiums
UNDERPINS 75% OF DEMAND
Successful in putting a floor under the premium increase ‘death spiral’
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IN ADDITION…...TO MANAGING OUT-OF-POCKET RISK
Informed financial consent /
known gap
Second tier default benefits Prostheses list to determine
medical device benefits
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UNINTENDED CONSEQUENCES
Regulation stabilises membership growth but further restricts ability for health funds to manage input costs
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THE REGULATORY ISSUES
PROSTHESES PRICING
COST-SHIFTING
THE ARTIFICIAL FLOOR
THE WASTE
REINSURANCE ARRANGEMENTS
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PHI REVIEW .
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PHI REVIEW GOVERNMENT OBJECTIVES
27
Address market failures Increase transparency Reduce need for regulation
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PHI REVIEW – HEALTH FUND OBJECTIVES
28
Sustainability
of the whole health
system
Affordability
managing input costs
and creating
efficiencies to keep
premiums low
Transparency
help consumers
navigate a complex
system
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PHI REFORM .
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HEALTH FUNDS ARE WILLING TO DO THEIR PART
• Ensure all savings from PHI
reform are passed on to
members
• New models of care for
chronic disease and allied
health
• Transparency on out-of-
pockets and quality
• Make it easier for
Australians to use their PHI
• Common clinical terminology
and navigation
• Rapid implementation of
Gold/Silver/Bronze
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PROSTHESES PRICING .
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Reforming Prostheses List pricing is an immediate step
the Government could take to ease premium price
pressures on consumers.
Health funds have committed to pass on, through lower
premiums, every dollar that is saved through prostheses
pricing reform.
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THE GOVERNMENT NEEDS TO DO ITS PARTStop the gouging of private health patients and veterans for medical devices
Australian health funds are forced by government regulation to pay the highest prices in the world for
medical devices, at up to 5 times the price charged for the same device in the same hospitals to public
patients.
This is pushing up premiums – a record $2bn has been spent on medical devices in the last year
The first step is a new Prostheses List Advisory Committee to drive price disclosure and reference pricing
This will bring medical device benefits in line with real market prices locally and globally to save between
$150 and $300 per policy.
A further $120m will be saved from DVA patients that could be better utilised to support veterans’ health
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PROSTHESES PRICING
Device PL Price Comparison PriceDifference
Zimmer Trilogy cup uncemented $2,900 $1,939 Almost 50%
Xience Everolimus Eluting Stent System $3,450 $655 426.3%
Evia HF-T cardiac pacemaker $13,520 $6,862 Almost 50%
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UNSUSTAINABLE GROWTH IN PROSTHESES COSTS
35
8-12% 14%$800million
annual growth of prostheses
benefits
of all hospital benefits paid by
health funds are prostheses
could be saved with a new
pricing model
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BUSTING THE MYTHS
The Medicare system and the
private health system are mutually
exclusive and compete with each
other for resources
1.
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BUSTING THE MYTHS
There is over $10 billion in Federal
Government subsidies going to
support Private Health Insurance;
2.
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BUSTING THE MYTHS
There is $5.1 billion of extra money
tied up in health funds as ‘excess
capital’ which could be passed
back to members
3.
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BUSTING THE MYTHS
There is something wrong with
health insurance because people
don’t get back all the money they
pay in premiums
4.
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BUSTING THE MYTHS
Consumers don’t value private
health insurance because it is ‘all
too confusing’
5.
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FUTURE OPPORTUNITIES
Re-align incentives to encourage health funds to invest in chronic disease management and out-of-hospital
preventive treatment
‘Prospective risk equalisation’ replaces retrospective system based on claims made
Top 2.5% of ‘frequent flyers’ responsible for 35% of all PHI benefits
More than half of Australians have a chronic condition, 45% of people over 45 have more than two (AIHW)
A majority of people suffering CD are not enrolled in a CDMP
41
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TOP 12 CHRONIC CONDITIONS BY COSTPrivate health insurance benefits paid (hospital only) 2013-14
1 Osteoarthritis
2 Coronary Heart Disease
3 Depression
4 Oral disease
5 Colorectal Cancer
6 Chronic Kidney Disease (excl. regular dialysis)
7 Cerebrovascular Disease
8 Diabetes
9 Coronary Obstructive Pulmonary Disease
10 Lung Cancer
11 Asthma
12 Osteoporosis