LEANNE WELLS. Private health care in Australia: health policy’s wicked problem.

The anguish expressed by many of the 1,200 respondents to the Consumers Health Forum’s Out of Pocket Pain survey highlights the widening gulf between the cost of modern medical care and the struggle of many Australians to pay for that care.

The survey conducted by CHF showed that more than a quarter of respondents treated for breast cancer incurred out of pocket costs of more than $10,000. For those with chronic autoimmune conditions like multiple sclerosis more than a third had costs of more than $10,000.

Pensioners and low-income earners, who still cling to their health insurance cover, found they could not afford the private treatment they had put by for over the years — despite ever-rising premiums — because of the gap costs that going private exposed them to. There were women whose shock at learning they had breast cancer turned to desperation when they realised the treatment and scans recommended by their doctor would cost their meagre means so dearly. 

Besides often high costs, it was the significant impact on people’s lives and lifestyle, and the unexpected and confusing nature of why and how out of pocket costs were imposed.

The daunting expenses so many faced seem often to fall randomly. While some might pay nothing, others paid $5,000 in gaps for the same or similar procedures.

There is an unsettling lack of reason or conformity to the way the private health system interplays with the public system. Diagnostic imaging which is recommended for many breast cancer patients is not covered by Medicare or health insurance.

Many patients are counselled by medical specialists to take the more expensive private option because of long delays in the public system.

Meantime the private healthcare market, where profits appear to come before patients, powers on. Publicly listed health funds earn high profits while their revenue from premiums often rises faster than the benefits they pay out to their members, according to APRA data.

Specialists charge fees that are often beyond the reach of people without health insurance and often stretch those with private cover.

The growth in health fund membership this century, although now turning down somewhat, has failed to deliver, as promised, an easing of strains on the public hospitals. Indeed the opposite is occurring. Statistics released last year indicate more insured patients are using public hospitals and spend half as long as public patients on elective surgery waiting lists in public hospitals.

The distortion in supply and demand of surgical services, where now well over half of planned surgery is performed in private hospitals, is entrenching a two-tiered health system. The majority of Australians without insurance face lengthy delays for life-changing procedures like hip replacements and cataract operations.

Another disturbing element that comes into sharper focus after the release of the Out of Pocket Pain survey last week was the reactions to the patient experience by health funds or doctors’ groups.

The suggestion from Private Healthcare Australia to Out of Pocket Pain was that you had to be “a little bit careful” about the survey findings because the CHF had gone to member organisations “which are groups representing sick people and asked them to put in complaints about out of pocket costs”.

For the record, CHF did not ask sick people to put in complaints about out of pocket costs.

In our invitation to supporters, groups and to the general public across social media we stated that “Out of pocket medical costs are hurting a rising number of Australians” and that the Federal Government has recognised the community’s concern about this issue and has set up a committee to look into it.

CHF is the only representative of consumers on the committee. To strengthen the voice of consumers by presenting their experience with out of pocket costs, we invited people “to share your experiences by responding to the survey”.

Call them complaints if you must, but the patient experience is valid data. As many commentators remind us, including those as diverse as the Interaction Institute and Oxford Professor Trisha Greenhalgh on a recent lecture tour of Australia, we can, and should, use stories as part of strategy and evaluation. In complex systems, stories become avenues for sense-making as well as means of capturing the diverse human experience in a system. Stories can provide qualitative data about how systems are changing and how they could be improved.

The experiences respondents shared in the survey indicate complex and troubling woes with our health system that require deep reforms. 

We remain concerned that the key actors – the doctors, the private hospitals and the health funds – will be able to reach an accord in the interests of consumers. For now, they are all at the table on the many committees Minister Hunt has set up to examine and recommend policy change across a broad spectrum of private health issues.

That is why we are appealing to the Government to establish a Productivity Commission inquiry to investigate government assistance to health insurance and recommend changes to improve circumstances for consumers.

We know that with rising out of pocket costs, people are increasingly questioning the value of private health insurance. Many are being priced out of the market for private health insurance and private healthcare altogether. The causes are deep-seated, complex and difficult to resolve.

CHF has not advocated for the abolition of the health insurance rebate. However, we believe if it is to remain, it should be better targeted to policies that offer real value. 

The public-private nature of our health system is complex and there are a mix of incentives at play that encourage the uptake of private health insurance. We believe that it is not ideal policy to have the debate about one of those – the rebate – in the absence of a wider look at the problem we are trying to solve by having private health insurance arrangements in the first place. We need to examine the contribution of the rebate to the future sustainability and stability of our health system.

As Carolyn Gullery from Canterbury District Health Board in New Zealand puts it “we need the whole system to be working for the whole system to work”. That is why CHF believes we can’t ‘fix’ the jigsaw by looking at one piece of the puzzle. 

This is why CHF was the first to call for a comprehensive Productivity Commission review. Overall, there needs to be much greater clarity and transparency about private health insurance costs and benefits.

We are looking for a robust public benefit test and evidence, as with all government spending, that the community benefits from that expenditure

It is important to have a thorough inquiry by the Commission and then take action based on its recommendations and the evidence it presents.

Leanne Wells is CEO of the Consumers Health Forum of Australia.


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3 Responses to LEANNE WELLS. Private health care in Australia: health policy’s wicked problem.

  1. David Brown says:

    Private health insurance targets people that want to feel better served and superior to other people that (only) rely on the universal Medicare scheme.

    People that choose private insurance do not pay the Medicare levy part of their annual tax bill. The levy is calculated as a percentage of taxable income, which can provide high income earners with yet another tax reduction loophole and for them a useful offset for the cost of insurance.

    Other people get fooled by the promises of choice of doctor, priority in queues for non-essential services, (possibly) better hotel style meals, individual rooms, extra (non-medical) services in hospital (and staff that expect to be bullied by their superiors) and cooperate with private hospitals and specialist doctors in their efforts to charge higher fees for their services.

    Dental services (and perhaps other ancillary treatments) are not currently fully covered by Medicare, can be included by insurers in return for higher premiums and may be financially worthwhile for some people (?????).

    The insurance companies charge their customers annual fees. They claim Medicare fees that apply for services per the standard schedules and, as noted in this article, customers are also charged so-called Gap fees where GP and specialist doctors choose to charge more than the Medicare schedule fees. The insurers are also paid substantial subsidies by the federal government that are guaranteed to permit them substantial profits.

    Private health insurers appear to offer little for moderate users of GP visits, the biggest issue for us consumers of GP services seems to be the relentless efforts by the pharmaceutical companies that attempt to corrupt GPs (other prescribers and the government/TGA) in their choice of drugs for treatments.

    Private specialist doctors and private health insurers seem to be made to assist each other to make money and gouge us consumers with very little accountability.

    If a specialist doctor recommends an expensive procedure I suggest patients/victims do whatever research they can. A great source of excellent discussion is the ABC Health Report with Norman Swan (I think past sessions are available through ABC iView). He picks a couple of topics each week and interviews experts to discover the latest research findings and whether GPs and specialists are making sensible diagnoses towards our quality of life.

    My other advice is to assume public hospitals are usually the best place to go for competent and well intentioned treatment and if there seems to be a long wait for treatment then carefully consider if the treatment is really something you need. In my experience, provided we eat sensibly, stay calm, keep active and wait a while our bodies are remarkably good at dealing with many issues without drugs or interventions.

  2. Jan Donovan says:

    A well argued article on a wicked problem in Public Policy.

  3. R. N. England says:

    The core of capitalism is the negotiation of a price for goods or services between two parties. When the service is medical treatment that is necessary to save a life, the asymmetry of the negotiation is at a maximum. Hence the exorbitant price. The theory is that one party is exchanging something he owns, for money which passes from the ownership of the patient to the ownership of the provider. The theory falls down when it is realised that the expertise that can save a life has developed in a culture, and cannot be considered to be the property of an individual. The whole thing, like the rest of capitalism, is a fraud and a rip-off.

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