Australia Yearbook - 2001

358 Year Book Australia 2001
9.36 PERSONS WITH PRIVATE INSURANCE, Proportion of Total Population
1990
1992
June
1999
%
%
%
%
%
%
%
With private hospital cover 44.5 41.0 37.2 33.6 31.9 30.5 30.5
With private ancillary cover 39.9 37.5 34.5 32.9 31.6 31.7 31.9
Source: Private Health Insurance Administration Council, Quarterly Statistics, June 1999.
1994
1996
1997
1998
Private health insurance
Private health insurance is offered by
44 registered health insurers, giving a voluntary
option to all Australians for private funding of
their hospital and ancillary health treatment. It
supplements Australia’s Medicare system, which
provides a tax-financed public system that is
available to all Australians. Depending on the type
of cover purchased, private health insurance
provides cover against all or part of hospital
theatre and accommodation costs in either a
public or private hospital, medical costs in
hospital, and costs associated with a range of
services not covered under Medicare including
private dental services, optical, chiropractic,
home nursing, ambulance and natural therapies.
The private health sector funds around one-third
of all health care in Australia. A sustainable
balance is being sought between the public and
private health care sectors to ensure a high level
of access and choice now and into the future.
Health insurance coverage
The proportion of the population with private
health insurance has continued to decline over
the last decade. At June 1999, 31% of the
population had private hospital cover, and
32% held ancillary cover (table 9.36).
Rebate on private health insurance
premiums
In response to declining coverage of the
population by private health insurance, from
1 January 1999 the Commonwealth Government
introduced a 30% Rebate on premiums paid for
private health insurance. All Australians eligible
for Medicare and covered by a health insurance
policy offered by a registered health fund are
eligible for the Rebate. The Rebate gives people
30% of the cost of private health insurance
premiums on hospital cover, ancillary cover and
a combination of both. Since the Rebate is set at
30% of the actual cost of premiums, it keeps pace
with any increases in individual fund or product
premiums. The Rebate can be taken as a direct
premium reduction, a refundable tax rebate or
a direct payment available from Medicare offices.
Community rating and reinsurance
Community rating is the underlying principle
of the current private health insurance system.
Community rating means that people cannot
be discriminated against in obtaining health
insurance on the basis of health risk. Community
rating requires that in setting premiums, or
paying benefits, private insurers cannot
discriminate between contributors on the basis of
health status, age, race, gender, sexuality, use of
hospital or medical services, or general claims
history.
The principle of community rating is supported
by a reinsurance system within the private health
insurance industry.
Reinsurance supports the principle of community
rating by sharing between health insurers the
hospital and medical costs of high risk members
admitted to hospital. Insurers with a greater
proportion of low risk members (generally the
young) pay contributions into the reinsurance
pool while those with a greater proportion of
high risk groups (the chronically ill and the aged)
receive transfers from the pool.
Recent initiatives in private health
insurance
Recent initiatives include the following.
Developing ‘no gap’ or ‘known gap’
products—uncapped medical bills charged by
practitioners to privately insured hospital
patients have raised issues concerning the
amount of the ‘gap’ fee, as well as the fact that
patients may be unaware of the likely financial
implications until after their treatment is
complete. Private insurers are required to have
in place ‘no gap’ and ‘known gap’ products by
July 2000.
Simplified billing—this addresses the problems
of multiple bills and unforeseen out-of-pocket
costs for private patients. Simplified billing
encourages hospitals, doctors and health funds
to work together to simplify the billing process
and make sure that patients are informed
about any out-of-pocket costs they may have