OpinionWhy health fund premiums are risingMark Fitzgibbon

Like it or not, we face a future of rising health insurance premiums simply because each year we’re spending an extra 5-6 per cent per capita on our healthcare across both the public and private systems. It’s only more obvious with private health insurance (PHI) because unlike with the public system and taxation, it’s separately billed by insurers.
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And it’s sure not getting any easier on PHI given the necessary cost shifting from public to private funding already underway. For example, in 2016 PHI paid near $1.5 billion to public hospitals almost triple what was paid in 2006. It’s necessary because we are running short of taxpayers sufficient to fund a growing retired, generally more expensive, population.

That’s not to suggest PHI doesn’t have to do even more in reigning in cost and premium inflation. Although we can’t change aging, which contributes about 1 per centeach year, we can push back on the prices paid for healthcare goods and services. Plus we can seek to reduce the level of unwarranted and avoidable treatment.

So we know PHI is paying twice as much for its patients’ medical devices compared with public patients. It’s a total scam. On treatment we know the chances of patients having spinal surgery can vary fivefold depending upon where they live.

Past attempts to reign in cost inflation have largely been preoccupied with the healthcare market “supply side” such as managing the price of doctor’s fees. However, managing demand in the first place is at least as crucial. In most public systems demand is simply managed by limiting doctor and hospital supply with the outcome being the rationing (read waiting times).

This isn’t an option for PHI given choice and rapid access is why people buy it. Rather PHI must look to help members make more informed decisions about treatment and doctor choice. While there’s no place for insurers to be involved in the ultimate clinical decision, there is certainly an opportunity to provide members (and their GPs) with reliable performance data information about their treatment options and choice of doctor.

People should have at their fingertips evidence on surgical and non-surgical options and be able to compare the clinical performance of surgeons. The digital age is allowing data to be collected and published in a way never before possible. As it is throughout all market places, the digital age is via information shifting power away from sellers to buyers.

Another way of better controlling demand is to ensure “frequent flyers” receive more coordinated care to keep them healthy and, without compromising outcomes, out of high cost settings such as hospitals. These typically older people account for the lion’s share of costs but the delivery of more coordinated care is often blunted by the daily pressures on GPs, system fragmentation and multiple funding arrangements.

A better approach to frequent flyers would be to allow insurers to take full responsibility for their healthcare needs and payments. So Government would pass onto insurers what they would otherwise expect to pay for the person with mandated requirements around quality of care.

As we have for the past 50 years, ns will continue to spend more on healthcare relative to other things. As such, PHI premiums will continue to increase. However, with the right kind of policy settings and innovation annual increases more in the range of 3-4 per centare achievable.

Mark Fitzgibbon is the chief executive officer ofnib health funds

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