Submission to the Senate Standing Committees on Community Affairs: Inquiry into the Value and Affordability of Private Health Insurance and Out of Pocket Medical Cost
CPSA's response to the Senate Standing Committees on Community Affairs' Inquiry into the value and affordability of private health insurance and out of pocket medical cost. More information about the inquiry can be found on the Parliament of Australia's website.
CPSA welcomes the opportunity to comment on the inquiry into the value and affordability of private health insurance and out of pocket medical costs. As an organisation representing the interests of pensioners and low income retirees, CPSA strongly supports the continuation and expansion of universal health care as it is the only way to ensure equity of access to health care. CPSA is firmly of the view that your income should not determine your access to the health care you need.
CPSA provides free information and advice to members and the general public about a range of issues. In 2016-17 around 10% of these calls were specifically related to health care costs including private health insurance. The majority of these health-related calls were concerned with access to affordable dental care. CPSA also received regular calls regarding ambulance transport, the cost of scripts and health related transport particularly from people living in rural and regional areas. CPSA took a number of calls related to private health insurance. These callers were either questioning the value of private health insurance or seeking clarification regarding the Lifetime Health Cover (LHC) loading.
Based on CPSA call data, this submission focuses on four key issues – whether private health insurance represents value for money, the Lifetime Health Cover Loading, out-of-pocket dental costs, and out-of-pocket health transport costs.
Value of private health insurance
A recent study by The Commonwealth Fund compared 11 different national health care models around the world and ranked Australia’s public/private system as the second best overall. However, any claim that Australia’s health care system has to superior performance is undermined by below average results in equity and fairness. In many cases, Australia’s health care system is not accessible to low income households. Many individuals and households face financial hardship and reduced access to treatment as a result of high out-of-pocket medical costs that are not covered by Medicare.
Australians are paying 20 per cent of all Australian health care expenditure out of their own pockets. In comparison, out-of-pocket medical costs account for only 10 per cent of health expenditure in the United Kingdom, 13 per cent in New Zealand and 14 per cent in Canada, which have similar government funded health systems. Australia’s out-of-pocket medical costs are high by international standards and constitute a direct barrier to accessing health care for low income households. This highlights that higher out-of-pocket health costs are associated with greater financial barriers to accessing health care. Many people who live on a full rate pension survive from one fortnight’s pay to the next. They simply do not have any additional money to spend on a visit to the doctor. In 2015-16, 8 per cent of Australians who needed to see a medical specialist delayed or did not go because of the cost and 19 per cent of those who needed to see a dental professional delayed or did not go because of the cost. Sacrificing medical care because of the costs is unacceptable and disproportionally affects low income households. A fee of any amount is enough to prevent many from seeking medical advice and care.
CPSA notes that even when consultations are covered by Medicare, patients are often required to pay the full cost of the consultation upfront and lodge a rebate claim later. Many low income households are unable to front the cost of a specialist appointment, which may be hundreds of dollars. CPSA also notes that these consultations invariably result in additional out-of-pocket costs such as prescriptions or referrals for scans and other treatments that may not be entirely covered by Medicare. These are extra costs which low income households cannot afford.
CPSA highlights that since the introduction of electronic Medicare rebates, where a claim can be lodged online, there has been a significant increase in the time taken to process rebates that have been lodged manually. CPSA was recently contacted by a member who had previously received their rebates 5-7 working days after lodging a claim with Medicare. They now have to wait 6-8 weeks for the claim to be processed. It is unacceptable to force people who are not online to wait much longer for their Medicare rebates to be processed than people who lodge their claims online.