On Our Agenda: An Opportunity for Private Health Insurance

By Sharon Smith
Thursday, 23 July, 2015

The conflict between private health insurer Medibank Private and the Australian hospital system is gaining more and more public attention with yesterday’s statements from both Medibank and the AMA president Professor Brian Owler during his National Press Club address.
Prof Owler noted his concern over our currently excellent private health insurance system that could be headed towards that of a United States-style system, ‘that places an enormous administrative burden on the patients and on the practices. It actually increases costs and, at the end of the day, the only one that wins is the insurer,’ he said.
The Sydney Morning Herald reported on the situation with an example of Medibank Private refusing to pay out on situations where women died in childbirth, under revised negotiation terms where Medibank is refusing to cover what it deems as mistakes made by a hospital, which they term ‘preventable events’. While Prof Owler did not directly address this example he did agree that private health insurers having a much greater say over what they will and will not cover will be detrimental to the industry. The insurer was quick to respond to the maternal deaths quote, with this statement:
We’d also like to correct any potential misunderstanding regarding our treatment of maternal death associated with childbirth. This tragic and very rare event, which is classified as a sentinel and reportable event by the Australian Council on Healthcare Standards, has been an inclusion in the contracts Medibank has agreed with hospitals for some time. While we are currently negotiating its inclusion in our contract with Calvary Health Care, we understand it is a common industry practice not to pay for this event. On the rare and highly regrettable occasion that it does occur, it is not uncommon for hospitals to waive a charge to private health insurers.
This extremely unfortunate sentinel event is not included in the list of highly preventable adverse events that we are negotiating with Calvary Health Care or other hospitals.
Meanwhile, the Australian Dental Association has come out in support of Calvary Health Care in its protests against Medibank Private, who they say has taken an aggressive approach to the public, the ADA members and dental industry regulators.
President of the ADA, Dr Rick Olive AM RFD says, “What we are seeing in these negotiations is the beginning of more aggressive moves by certain private health insurers to interfere in the clinical practices and frameworks used by established health services. Financial considerations of the insurer rather than what is clinically appropriate in the delivery of health to its members is becoming the main driver of how it wants to provide healthcare.”
The ADA alerts the public that these aggressive moves by Medibank to Calvary are an indication of private health insurers appointing themselves as the gatekeepers to appropriate healthcare. When private health insurers demand that policyholders change their health providers, those policyholders should consider changing their private health insurer instead.
“These current moves by the one of the biggest private health insurers in the country are an indication of what is to come in the private health sector if there is no action taken by the Australian Government,” Dr Olive says.
Healthcare industry professionals are united in one sentiment: the public is being sold health insurance products that are not necessarily going to be suited to their needs, when the time comes for claiming. The Medibank Private-Calvary conflict may in fact be a positive thing if it brings about scrutiny of Australia’s private health insurance sector, allowing “junk” products to be discarded and medical providers to have say in what is in the best interest of their patients.
Professor Owler says, “The private health insurance sector is not uniform. We also have the mutual funds, who are there to benefit their members, and this is a very different approach - particularly in dealing with them as the AMA has experienced.”
“And so we need to make sure that the constant cost-cutting that we see Medibank Private doing does not undermine the ability of the other private health insurers to actually maintain their level of services and their level of coverage.”

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