Home' News Bulletin : ADA News Bulletin November 2015 Contents 19
to $26.7 billion in 2012–13. Of this total recurrent funding,
individuals spent 19.2% (or $5.3 billion) on dental services, greater
than the 19% amount or $5.1 billion in 2012–13. Dental services
continued to be the health service that received the second highest
amount of recurrent funding from individuals, compared to
medications, which received $9 billion or 32.4% in 2013–14.*
Individuals’ funding of recurrent health expenditure, by
area of expenditure, current prices, 2013-14 (14%)
and other, 1%
All other medications,
HEALTH EXPENDITURE BY PRIVATE HEALTH INSURERS
PHI provided most of their recurrent funds to private hospitals,
which received $6.3 billion or 49.3% of funding in 2013–14.
The next highest category for PHI allocation of recurrent funding
in 2013–14 was for dental services, although the proportion is
much smaller ($1.5 billion or 12% of the total recurrent health
expenditure) compared to private hospitals – this is an increase
compared to $1.4 billion or 11.8% in 2012–13. Recurrent PHI
funding for medical services was closely similar to the amount
spent on dental services ($1.4 billion or 10.7%) in 2013–14.
The ADA’s analysis shows that PHI can provide more towards
contributor’s dental care costs. Consistently, PHI use the income
received through premiums for general treatment (ancillary
services) cover to subsidise the other components of their
insurance cover. This practise has been occurring for more than a
decade, where PHI have accumulated an $8.7 billion surplus (of
which $5.4 billion has accumulated over the last five years alone).
This surplus represents the difference between the money received
via general treatment cover premiums compared to the amount of
rebates actually paid out for general treatment services.†
The Private Health Insurance Administration Council (now
the Australian Prudential Regulation Authority) reports that
contributors to general treatment cover use dental treatment
the most. Therefore, the PHIs’ $8.7 billion surplus shows that
contributors’ rebates for dental services could be substantially
*Note that there may be some rounding differences between the
percentages referred to in the text and the charts.
† Private Health Insurance Administration Council, Annual Reports.
increased. This increase in rebates could significantly reduce out-
of-pocket costs for dental services to those insured, however little
action has been taken by PHI.
Private health insurance funding of recurrent health
expenditure by area of expenditure, current prices,
2013-14 ($ million)
Aid and appliances, 575
and other, 1
There have been recent reports about the record increase in
complaints about private health insurance. The Private Health
Insurance Ombudsman (now the Commonwealth Ombudsman)
State of the Health Funds report showed a 34% increase in
complaints about exclusions and restrictions in 2014–15 compared
to the previous 12 months. Consumers are also ‘voting with their
feet’, indicating they see their policies do not offer adequate value
for the premiums they pay. Data from Australia’s own private health
insurance industry peak body, Private Healthcare Australia, indicates
that more than 2.5 million insurance policies have been cancelled or
downgraded between February 2012 and December 2014.
The ADA continues its advocacy on private health insurance
shortcomings to the Australian Government and Parliament.
Throughout 2015, the ADA provided further comment to the final
report on the Competition Policy Review with the Department
of Small Business, and is implementing a broader strategy on
engaging with the private health insurance industry. The ADA
continues to emphasise the importance of protecting patient
choice of provider so as to preserve continuity of care. In recent
years, the overall average increase of dental fees has consistently
been less than the health cost of living index. When it comes to
fee increase restraint, the dental profession has continued to do its
part through an average 2% increase in 2014.
Private health insurance’s focus must always be on enabling and
maintaining consumers’ continuity of care and protecting their
choice of provider regardless of whether or not they are associated
with a particular private health insurance company. There is a
role for private health insurance to play – supporting the primary
relationship between the healthcare provider and the patient.
Senior Policy Officer
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