Industry insight - private health insurance
Updated: Jul 11, 2019
One of the most significant changes in our industry this year has been the removal of specific modalities from private health insurance. And, as they say in opera, it ain’t over until the fat lady sings! Well, she’s taking another breath….
Two decades ago, the John Howard government introduced significant changes to the funding of the healthcare system in Australia. These changes were designed to encourage people to take out private health insurance instead of relying solely on the public system. One form of this encouragement is in the Medicare Levy Surcharge, whereby those that do not have private health insurance incur an extra tax. This surcharge only applies to those earning above a certain threshold, so those that are on higher incomes have more of an incentive to take out insurance than those on modest incomes.
The second form of encouragement is in higher premiums for those who don’t take out insurance by the time they turn 30. The premium increases by 2% for every year above the age of 30 that you don’t have insurance. This means if you take insurance out at the age of 35, your premium will be 10% more than the person who has held insurance continuously. (On the plus side, you would have saved yourself 5 years of premiums!)
The third form of encouragement is to subsidise the health insurance premiums to the tune of 30%. This means that if your private health insurance premium were $1,000 / year, you would only have to pay $700, with the remaining $300 being paid by the government. (As an aside, that subsidy is still paid indirectly by you as a taxpayer!)
The effect on the complementary medicine industry
Without going into further debate on the pros and cons of private health insurance (at least in this article), most complementary medicine practitioners would cite some definite benefits to this arrangement. Health funds wish to minimise on the claims they payout and therefore recognise that those who take a proactive approach to their health and use complementary therapies are less likely to make a claim than those who don’t.
Depending on the level of cover you pay for, you may be eligible to claim a rebate for using the services of a complementary medicine practitioner. For example, if you paid $120 for a consultation, you may get $25 back on your health insurance. This means those with private health insurance, and who pay extra to look after their health, are more likely to visit complementary medicine practitioners more often. It is a way of rewarding good behaviour.
What happened this year?
In April of this year (2019), legislation was passed that removed the ability of private health funds to grant rebates for many complementary medicine services, namely Naturopathy, Western Herbal Medicine, and Homoeopathy. This was on the basis that there was no evidence behind the efficacy of these therapies. Nutrition, however, stayed on the list. The report that concluded the lack of evidence behind these therapies has been heavily criticised for its flawed methodology.
What happened next?
Within one week of the legislation being passed, the Health Minister Greg Hunt announced that this decision would be reviewed. This announcement was made on a Sunday, and he has committed $2 million to funding it to see if there really is evidence behind these other modalities.
It is quite staggering that researchers could come to the conclusion that they did, given the insurmountable evidence behind the efficacy of natural therapies.
For a government, minister to announce a review of legislation within a week of its passing, and on a Sunday no less, indicates that someone somewhere thinks there may have been a mistake!
Does it really require two researchers to be paid the princely sum of $2 million to be able to demonstrate what we already know? The mind boggles at what their hourly rate will be.
How will it affect you?
If you are a healthcare consumer, private health insurance suddenly became a lot less attractive. If you are paying for ‘extras’ cover, you may wish to reassess the cost and benefit of your insurance.
If you are a practitioner, we would like to hear whether the removal of rebates has significantly affected your patient visits or your income. How many of your clients claim a rebate? Do they value your service more than the $25 they get back?
If you are a student or thinking of becoming one, it is clear that whatever the situation is with health funds today, you can’t base your decision to enrol on it. Modalities may come and go. Private health insurance may come and go. Your passion for natural health will stay. And people with health issues who need your help will be around forever.
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