Excluding care like mental health from cheaper health insurance policies is proving to be a big battleground as insurers work towards standardising their policies as part of the federal government’s industry overhaul.
The Turnbull government has proposed a major revamp of Australia’s private health insurance system in order to simplify the products that will categorise health insurance policies as either gold, silver, or bronze.
The Australian Financial Review can reveal that after the third meeting held last week by the Private Health Ministerial Advisory Committee, which includes representatives from the healthcare and insurance sectors, an option has been proposed that excludes mental health hospital cover from the lower categories.
“There is definitely a model that doesn’t have those services covered in those lower tiered categories that has been put forward by health insurers. There is a model being built by government actuaries, based on work by insurers,” said one well-placed source.
Government actuaries are modelling a range of options put forward by the committee and are expected to come back with results in March. The committee will eventually make recommendations to new Health Minister Greg Hunt.
Private Health Care Australia – the private health insurance industry’s peak body – said that while the sector was not lobbying for mental health and palliative care to be excluded from cheaper policies, it would not rule out any exemptions from the lower tiers. Offering policies that exclude some services is a way to provide cheaper products and can also encourage more young people to take up health insurance, because it means they’re not paying for care they don’t need.
“In terms of the specifics of what the committee is doing, all product levels except gold will have exclusions,” said PHA CEO Rachel David, who sits on the advisory committee. “But what those exclusions are has not yet been determined.”
“I can pretty much guarantee that the idea behind bronze is that essential services that you would expect to be covered by health insurance will be in bronze.”
Ms David said the committee was working on product classifications and ensuring there was common clinical or medical terminology used by health funds for inclusions.
A BUPA spokesman said the insurer was looking to “strengthen community-based and in-home mental health and palliative care choices”, while a Medibank spokeswoman said the group was “supportive of palliative care and mental health support being a part of private health insurance cover”.
According to the competition regulator, many health insurance policies, including from some large funds like BUPA and Medibank Private, already restrict cover for mental health patients. With the public system stretched, private health insurance funds about 80 per cent of the costs for mentally ill patients in hospital, it said.
Mr Hunt made it clear upon his appointment that mental health was an area of focus. He told the Financial Review limiting cover was not on his agenda.
“Watering down cover for mental health and palliative care is absolutely not on the table,” he said. “It has not been proposed by the industry, and under no circumstances would I accept it.”
Professor Ian Hickie – one of Australia’s first National Mental Health Commissioners who also co-heads University of Sydney’s Brain and Mind Centre – said demand for mental health was growing rapidly, and denying or scaling back mental health coverage “is about cost shifting rather than good care”.
“Insurers can’t change the care system but I’ve not been surprised they are trying to limit their liability,” he said. “Any proposal by insurers to government about denying coverage to a certain part of the population … if we go down this path, that’s a road to hell. This is a social and economic disaster.”
Australia spent more than $8.5 billion on mental health services in 2014-15. While the Australian Institute of Health and Welfare claims that is $911 million more than four years ago, Professor Hickie said more money was needed as well as better focused expenditure.
Ramsay Health Care chief Chris Rex said he would be “very surprised and disappointed if the current government allowed the health funds to desert some of the most vulnerable people in society”.
The chief executive of rival private hospitals operator Healthscope, Robert Cooke, said: “We are increasingly seeing patients contact us and are very surprised to find they have been encouraged to buy a product that excludes mental health.”
Australian Private Hospitals Association head Michael Roff, who also sits on the advisory committee, said any move by insurers to try to limit mandatory mental health coverage would be of “grave concern”.
“The core problem for the health funds is they say they are hit by an affordability crunch, but this is being driven by volumes with more members claiming more often. The rate of admissions to hospital per health fund member has increased by 60 per cent since 2001. Clearly that’s not being driven by hospitals, it’s principally driven by the ageing population.
“Public hospitals over the past 12 months were paid $1.1 billion by health funds. If health funds are serious about making savings then they should be advocating to end that practice.”
[Source:-The Australiian Financial Review]