Australia's Leading Ophthalmic Magazine Since 1975

     Free Sign Up     

Australia's Leading Ophthalmic Magazine Since 1975

     Free Sign Up     
Soapbox

We need to talk about choice

07/05/2018
Bupa is planning to introduce major changes to its insurance policies and doctor’s groups are up in arms. Unfortunately, due to the complexity of private health insurance, many consumers simply aren’t aware of the impact these changes will have.

Therefore, there is a very real danger that the changes – which will limit patient choice – could slip through without proper debate. What if the power of big name insurers like Bupa is too great to counter?

What if the politicians and media owners risk losing too much by antagonising these corporate giants who collectively spend $190 million per year on lobbying and advertising, buying them a lot of influence and column inches?

I would encourage everyday consumers to take a close look at what is afoot. Bupa, Australia’s largest health insurer, is about to make a fundamental change to Private Health Insurance (PHI), the likes of which has never been seen before in Australia.

From August, Bupa proposes to limit the choice of fully insured surgical care to those hospitals contracted to it and which form part of the Bupa network.

Under this proposal if a Bupa policy holder (a patient) chooses a surgeon that is not operating at a Bupa contracted centre, they will receive only the bare minimum of legislated insurance cover. In short it will leave them with a large out-of-pocket expense.

"In breaking the current paradigm of PHI, it may be that Bupa has released a genie which gives a new momentum for reforming the health system."

This change is set to affect approximately 30% of day surgeries. Day surgeries often form part of the fabric of convenient local health communities. Bupa is claiming the change will ensure a medical service with minimal to zero out-of-pocket cost (but only if you go via their network of care). In essence this change is about limiting choice.

AMA President Dr Michael Gannon has likened the Bupa changes to “a big leap towards US style Managed Care”. Managed Care is a term often loosely used, but in essence it describes the system in the USA where privately insured patients ‘belong’ to a PHI and the network of medical providers who are contracted to it. In the USA, patients who want full choice must go outside their insurer and pay out-of-pocket for the medical and hospital services they procure. We are very lucky in Australia to have enjoyed full choice from all insurers. Until now.

So, what is more important to a patient? Choice when it comes to their surgical care, or out-of-pocket costs? It would be fair to say that both are relevant and it may be that being locked in to the Bupa network is the way patients choose to go. But this is a very big and very risky business decision Bupa is making. If successful it will almost certainly lead to increased profits for Bupa and the possibility that other private health insurers will adopt similar policies.

In a country like Australia, where choice of doctor is a fundamental benefit of private health insurance, one must seriously question whether patients will remain with Bupa or switch to a health fund that does allow fully insured choice. The future is uncertain and this experiment in health insurance will be closely watched. For those patients who struggle to pay their private health premium every month it is also a valid reason to lose faith in private health cover and seek an alternative.

largeleaderboard_0618
advertisement

Recently the concept of ‘Health Saver Accounts’ (HSA) has been suggested. Self Managed Super Funds (SMSF) allow for tax efficient retirement savings and HSA could work in a similar way. Basic mathematics suggests that over a 30-year period of invested contribution, one would easily save more than $100,000 if private health premiums were invested. Clearly this is not enough for catastrophic or severe chronic illness which is why the public system remains a safety net. However for elective surgery of a more routine nature it would likely be sufficient.

Let’s be imaginative. The taxation revenue foregone by a 15% concession could be funded from the PHI rebate, which the Federal Government already contributes up to 30% of insurance costs to at a cost of $6 billion dollars annually. One might argue that $6 billion would be better in a patient’s HSA than the profit sheet of a health insurer. The HSA could be topped up, passed on in a will, used for a family member or bequeathed to a Federal HSA ‘Future Fund’.

In breaking the current paradigm of PHI, it may be that Bupa has released a genie which gives a new momentum for reforming the health system and making best use of the $6 billion PHI rebate. Perhaps the PHI rebate is a policy which is past its use by date. It was legislated 20 years ago by John Howard, before Medibank and NIB floated on the stock market, and before Bupa came to Australia where it now makes more than 40% of its global profit…before that simpler time when health insurers were operating as not-for-profit.

Private health insurers are now more profitable than banks on a return for equity basis and when a company such as Bupa breaks a traditional model we are right to reassess the whole ‘box and dice’ and openly discuss imaginative health reforms for the future.


Name: Peter Sumich
Qualifications: MBBS, FRANZCO
Workplace: Hunter Street Eye Specialists
Position: Ophthalmologist
Location: Parramatta
Years in the practice: 17

 

largeleaderboard_0618
advertisement


Display ad Delux
advertisement
Editor's Suggestion
Hot Stories

AND/OR
 

Subscribe for Insight in your Inbox

Get Insight with the latest in industry news, trends, new products, services and equipment!