HEALTH minister Sussan Ley will demand the insurance industry explain if their customers in regional and rural areas are still getting value for money ahead of an expected shake-up of the $6 billion private health insurance rebate in the 2016 budget.
Private insurers and health providers will be asked if they can guarantee lower costs for medical devices like pacemakers and prosthetics would be passed on to consumers, if the government slashes the red tape that has been blamed for inflated prices in the private sector compared with the devices that are available through the public system.
In a discussion paper to private health insurers, health providers and consumer groups, the government questioned if people in regional and rural areas and Indigenous consumers - compelled to have private health to avoid the Medicare Levy Surcharge - get value for money from their insurers.
As an MP from country NSW, Ms Ley said she was particularly interested in improving value for Australians in regional and rural areas, where patients with private health often did not receive the same access to services as major cities.
The industry discussions and the outcome of the federation white paper - which will address health funding arrangements between the states and federal government - could see the Turnbull government consider ahead of next May's budget a new private insurance system that distinguishes between people who live in regional areas and cities.
Ms Ley is expected to raise a proposal for "medical savings accounts" that could see tax-deferred contributions for medical expenses when she meets stakeholders at a meeting on Monday chaired by the former Chairman of the Australian Competition and Consumer Commission, Professor Graeme Samuel.
The US has introduced two types of medical savings accounts over the past twenty years, as have China and Singapore. "We recognise that every lever we pull has an impact elsewhere in the system and that's why it's essential we develop a balanced reform package that is consumer-focused," Ms Ley told The Australian Financial Review.
"For example, it's important we consider regulatory issues that may be adding unnecessary costs to consumer premiums whilst also ensuring there are necessary protections for patients."
In the four days since, the government received more than 20,000 responses to a national online survey on whether health funds should charge higher premiums for smokers. Ms Ley said this showed private health insurance was clearly a "barbecue stopper".
"It's clear private health insurance is front of mind for consumers looking for better value for money and they want action," she said.
The government is concerned by the rise of "junk policies", or health insurance products that exclude or restrict medical services, because more people are downgrading or dumping all-inclusive health insurance policies or dropping insurance entirely.
"In 2014-15, the number of policies for hospital cover that exclude certain medical services, and also require patients to pay an excess and co-payment, increased significantly," the discussion paper said.
