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Jun 2019

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Australia: Cost shifting by public hospitals drives up premiums

Source: Asia Insurance Review | Mar 2017

Patients who choose the private option at public hospitals are unwittingly pushing up medical insurance premiums, with health insurers now paying more than A$1 billion (US$768 million) a year for care at public hospitals.
 
   An analysis by peak body Private Healthcare Australia shows that such costs have been growing at a rate of 12% a year, reported news.com.au.
 
   Every Australian is entitled to be treated for free in a public hospital. However, in a practice which is called cost shifting, public hospital staff often persuade patients who have private health insurance to claim their hospital stay from their insurer so as to be treated as a private patient. Many are told that doing so will help the public hospital system stay afloat.
 
   Private Healthcare Australia, which represents private health insurers, urges state-run hospitals to properly inform patients if being admitted as a private patient would expose them to extra costs, amid reports of out-of-pocket gap payments of as much as A$1,000 being charged. These fees are often waived by hospitals keen to increase the number of patients admitted as private patients. 
 
   But patients could be disappointed if they expect the red carpet treatment. A survey by HCF – Australia’s largest health insurer – of 35,000 members admitted to public hospitals as private patients over three years found that 60% did not receive the doctor of their choice and only 20% given their own room.
 
   Federal Health Minister Greg Hunt, who in February approved the latest private health insurance premium increase of an average 4.84%, to take effect from 1 April, has vowed to act on the issue.
 
   “I am concerned that this practice is putting pressure on private health insurance premiums and taking beds away from public patients that need them – and that leads to longer waiting times,” he said.
 
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