Private maternity closures put screws on insurance

5 minute read

Without access to private maternity care, young people may dump their expensive policies, endangering the system.

Obstetricians are having an MBS indexation crisis of their own, with failing private maternity units threatening to bring down the health insurance house of cards.  

As Gladstone Hospital obstetrics marks almost 150 days in bypass – forcing women to make the 90-minute drive to Rockhampton along a stretch of highway notorious for its potholes ­– private hospital operator Epworth has announced the impending closure of its Geelong maternity unit.

The situation in Gladstone, a regional town on Queensland’s coast, arose after the local private maternity unit shut down in October 2018, pushing more women into the public sector. The overwhelmed public clinic abruptly went into bypass in June.

Rockhampton Hospital, which at one point this year was also managing Biloela’s obstetric patients, has its own staffing issues.

The Gladstone maternity ward began a phased reopening in October, but still only accepts elective caesareans by appointment.

And until more staff can be recruited, according to Central Queensland Hospital and Health Service, that’s the way it will stay.

Victoria Health, for its part, said the increased demand in Geelong would be absorbed by the new Barwon Women’s and Children’s Hospital, which will be a public facility.

Construction on the new hospital has only just begun, however.

Epworth Geelong’s maternity unit will likely shut its doors in March next year.

AMA president Professor Steve Robson, an obstetrician gynaecologist in Canberra, said private maternity care was a canary in the coalmine for private health insurance.

“We know that two massive drivers of the uptake of private health insurance by young people are maternity and mental health,” he told The Medical Republic.

“If people say, ‘well, there’s no point in taking out private maternity cover because there’s no private maternity services available’ or that it’s out of reach, that driver for taking out private insurance is gone.”

Without the cohort of young, healthy people paying premiums, health insurers are left with an ageing client base – people more likely to be getting costly joint replacements or cardiac catheterisations.

“Young people [need to] get something out of it and say ‘this is valuable, I had a good experience having a baby’ … [and] ‘I’ll keep paying my premium so that when my kids need their tonsils out or their grommets in, we’ll be able to have it done privately’.”

If nothing changes to bring patient MBS rebates up or bring the cost of private maternity cover down, according to the National Association of Specialist Obstetricians and Gynaecologists, obstetric care across the country will start to resemble Gladstone.

“We lost … Sunny Bank Private in Brisbane, there’s talk that another one in Sydney is on its last legs and one in Adelaide as well,” NASOG president Associate Professor Gino Pecoraro told TMR.

“I haven’t heard anything yet about Perth, but the whole thing is a symptom of the same disease.”

NASOG believes the high cost of taking out a health insurance policy that covers obstetric care has played a significant role in driving these private maternity services out of business.

“Every step of the way, it’s as though you are being penalised for daring to use the private sector,” Professor Pecoraro said.

Reforms were passed in 2019 intended to make private health policies easier to understand by requiring insurers to classify their products as either basic, bronze, silver and gold.

Private Healthcare Australia told TMR that while the tiered arrangement did make it easier for consumers to understand what cover they were buying, it made it harder for funds to spread the risk across the insured population.

“Pregnancy is covered in the highest tier because the risk of something going wrong is very costly. The cost of preterm labour and delivery often exceeds $200-300k for example,” said PHA president Dr Rachel David.

Dr David also denied that insurers were the sole culprit, and that high out-of-pocket costs for the management of the pregnancy as an outpatient was also a strong deterrent to using private cover for maternity care.

The only fix for this, she said, was for the government to intervene and increase Medicare rebates for obstetrics items. The government, Dr David said, was where NASOG should focus its lobbying efforts.

Professor Pecoraro was sceptical of this.

“The line has always been that the poor multinational health funds couldn’t possibly afford [to lower the cost of maternity cover], but it’s a bit difficult to say that when they’re posting record million-dollar profits,” Professor Pecoraro said.

He didn’t deny, however, that the high out-of-pockets were also a factor.

“Even if you have the top hospital cover, the rebates that you get as a combination from Medicare and the health funds don’t go anywhere near covering the actual cost of accessing the service,” he said.

“They were never indexed and they haven’t kept up with costs.”

That’s all before factoring in the added cost of government-recommended blood tests and high-quality scans.

Professor Pecoraro said that if the government were to index the obstetric MBS fees to the AMA schedule, the problem would be at least partially solved.

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