Ongoing Reform of Private Health Insurance – what it means for Medical Devices

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Private Health Insurance (PHI) in Australia has been under the microscope for several years. With nearly half of all Australians choosing to purchase PHI, and a level of government subsidy by tax rebates, the value of PHI is of legitimate concern to Australians.

The focus of reform of the system has focused disproportionately on the cost of implantable devices. However, this issue is in a large part being dealt with by the implementation of the agreement between the Medical Technology Association of Australia and the Australian Government. Attention has now been turned to the functioning of the providers of PHI themselves.

The Australian Senate conducted an inquiry into the ‘Value and affordability of private health insurance and out-of-pocket medical costs’. The Senate report documented widespread dissatisfaction with the complexity of policies and unexpected out of pocket costs. Additionally, consumers complained that their covered benefits were ‘whittled away’ from their policies without adequate notification or clear communication. The Senate’s main recommendation was that policies be labelled ‘Gold, Silver, Bronze or Basic’. Each level of cover would have minimum requirements. The aim of the categorization is that consumers are able to realistically compare policies from different companies and to facilitate a better understanding of individual policies so that a more equitable and competitive market can function.

An area of concern for some medical device manufacturers is that some very common procedures that involve frequently old devices are only on the ‘Gold’ level of cover. These include:

  • Joint Replacements and Spinal Fusion
  • Cataracts
  • Dialysis
  • Weight Loss Surgery
  • Insulin Pumps
  • Chronic Pain

To receive services for the ‘heart lung and vascular system’ a minimum ‘Silver’ level of cover is required.

It may be that since so many health insurance policies have been continually downgraded over the years that the use of these new categories will make little real difference to the number of people actually covered for these procedures. This however remains to be seen. The new system for categorization will take effect in 2019.


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