The private health insurance industry has been on a well documented downwards trajectory over the years thanks to a heady combination of an ageing population, increased use of healthcare services, and rising premiums that make insurance unaffordable and unappealing - especially to young people.
Now, The Grattan Institute has released a new report titled 'Stopping the death spiral: creating a future for private health', a follow up to one of its previous reports where it claimed health insurance was in a death spiral, particularly among young people.
"For the past 20 years, private health insurance premiums have been rising faster than wages and inflation. Australians are paying more but getting less," the Grattan report said.
"The COVID crisis hasn’t saved private health. The industry was in a death spiral before the pandemic and it’s still in a death spiral today."
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See also: Has COVID dealt a death blow to private health?
With more than 40% of the population using private health insurance, the report says government and industry must work together to come up with a plan to salvage it.
"There is still too much government red tape, mollycoddling, and created dependency, so the sector looks to government to fix its problems," report authors Stephen Duckett and Greg Moran wrote.
"But government feels paralysed because if it changes the rules there will be losers who will shout loudly.
"The industry needs to face up to its own problems."
According to the report, those problems include "greedy" surgeons who charge patients "exorbitant fees", rorts in the prosthesis and device supply chain, unnecessarily long hospital stays, and insurers raising their premiums without giving members value for money.
The report found 6% of specialists' services in hospitals are billed at more than twice the Medicare fee, accounting for 89% of patients' out-of-pocket costs.
See also: How to save money on your health insurance
"Patients who have been paying insurance all their lives are understandably angry to get these surprise bills," the report said.
"The industry should rein-in these ‘greedy’ doctors, and the Government should ensure patients know more before surgery about the costs they could face, so they get fewer nasty surprises after surgery."
Ensuring private hospitals don't keep patients in hospital for longer than necessary could cut private health insurance premiums by 5%, while fixing the "pricing shambles" in the prostheses market could reduce the cost of hip and knee replacements and further reduce premiums.
It also argued insurers should be forced to justify premium increases.
"The Minister for Health should be more willing to reject premium-rise applications from insurers that can’t show they offer their customers good value for money."
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