The Australian Private Hospitals Association has come out swinging against the insurers and the health minister.
Health Minister Mark Butler has “been sold a pup” by private health insurers, according to the peak body for private hospitals.
The issue stemmed from a press conference back in late June, where Mr Butler reported “a material increase” in the amount of money that private health insurers were paying to hospitals, or the benefits ratio.
“With that in itself, leaving aside the flow through of increased insurance premiums to the private hospital sector, just that increase in the ratio that we’ve seen in the past several months will mean somewhere between $250 and $350 million additional dollars going into the private hospital system,” he said.
At the same press conference, Mr Butler said he had formed the view that there was no cause to take regulatory action against private health insurers and that – despite significant taxpayer support – it was technically a private sector.
“A lot of the claims for change have been made by the private hospitals on the funders of their system, which are private health insurers,” he said.
“I’m sure that insurers also have very clear views about the way in which private hospitals can become more effective, more efficient and more modern about the way in which they deliver their services.”
According to the Australian Private Hospitals Association, though, the conclusion that more money was going into the private hospital system was based on “false data and flawed analysis”.
“After a survey of APHA members found no improvement in contract/indexation rates or ex gratia payments, we then wrote to Minister Butler seeking an explanation,” APHA CEO Brett Heffernan said.
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In response, Mr Butler’s office noted that in its ratio was inclusive of the net risk equalisation special account and state ambulance levies; Mr Heffernan and the APHA contend that neither of these have previously been included in calculation the ratio of payments.
The key point being that neither the risk equalisation account nor the ambulance levies are paid to private hospitals.
“Risk equalisation partially compensates insurers with a riskier demographic profile by redistributing money from this account to insurers paying higher than average benefits,” Mr Heffernan said.
“It’s an insurance pool for insurers. It does not add to patient or hospital payments it just spreads the load for insurers. Including it is a classic case of double counting.
“The state ambulance levy is paid by insurers to state and territory governments. Ambulance cover features in many insurance policies so it is actually paid by policyholders, while private hospitals pay ambulance service fees for patient transfers.”
APHA is now calling on DoHDA and the minister’s office to regulate insurers to reinstate an 88% benefits funding ratio.
Mr Butler hosted a roundtable on Wednesday as part of the Labor government’s broader productivity push, covering health, disability and aged care.
The Medical Republic understands that Mr Heffernan and APHA were not present at today’s health roundtable.
