Online version of the 2012-13 Department of Health and Ageing Annual Report

Outcome 9: Private Health

Improved choice in health services by supporting affordable quality private health care, including through private health insurance rebates and a regulatory framework

Page last updated: 29 October 2013

Major Achievements

  • Introduced means testing of the private health insurance rebate.
  • Introduced legislative changes that mean the Lifetime Health Cover loading portion of health insurance premiums will no longer attract the Government rebate on private health insurance.
  • Streamlined how applications for health insurance premium increases are assessed.

Challenges

  • Ensure that implementation of changes in private health insurance rebate arrangements are informed by consultation with industry and the community.
  • Continue to streamline the premium round process in consultation with industry.

Performance

This is a doughnut chart and a table that summarises the results for all deliverables and key performance indicators in outcome 9 during 2012-13. The results show that 75% were met compared with 93.3% in 2011-12, 25% were substantially met compared with 0% in 2011-12 and 0% were not met compared with 20% in 2011-12.

75.0% MET

25.0% SUBSTANTIALLY MET

0% NOT MET

Period Met Substantially met Not met
2012-13 75.0% 25.0% 0.0%
2011-12 93.3% 0.0% 6.7%

Program contributing to Outcome 9

Trends

A record number of Australians continue to join health funds. Almost 12.7 million Australians have some form of private health insurance, and 47% (10.85 million people) are now covered by private hospital insurance.

Figure 9.1: Number of People with Private Hospital Cover, 1971-201378

The figure is a line chart showing the percentage of population with private hospital cover in Australia (denoted on y-axis) from 1971 to 2013 (represented by x-axis) and identifies key milestones in health insurance policy. In 2012-13, steady growth in the number of people with hospital cover reaching 47% as on June 2013.

Outcome Strategy

Outcome 9 aims to promote the sustainability of private health insurance and support consumer choice in health care. In 2012-13, the Department worked to achieve this Outcome by managing initiatives under the program outlined below.

Program 9.1: Private Health Insurance

Program 9.1 aims to support the sustainability of private health insurance and improve information for consumers of private health services.

Ensure the sustainability of the private health insurance rebate

The Department continued to help make expenditure on the private health insurance rebate sustainable by helping to introduce incoming testing of the rebate and developing legislation to remove the rebate on Lifetime Health Cover loadings and indexing the rebate.

Improve access to prostheses through private health insurance

People needing prostheses should have choice, while knowing they are getting products that provide value for money and are safe.

The Department aims to achieve a fair, equitable and sustainable prostheses reimbursement framework. This will ensure private health insurance expenditure is directed to clinically appropriate and cost effective prostheses. During 2012-13, the Department continued to work with stakeholders to find the best way to improve how new products are assessed and existing ones are maintained. Similar products – and their benefits – have now been grouped together.

The Department continued to administer cost recovery of the prostheses arrangements and the National Joint Replacement Registry.

Improve information for consumers

With the Department of Human Services, the Department continued to inform people about Lifetime Health Cover. Information about Lifetime Health Cover loadings on private health insurance premiums is mailed to people turning 31 and new migrants. The mailout seeks to ensure people know about Lifetime Health Cover, as set out in the Private Health Insurance Act 2007. Individual health insurers pay for the mailout based on their share of the market.

Top of Page

Ensure private health insurance covers clinically proven treatments

An evidence based review of natural therapies, which began in 2012-13, is aimed at ensuring that people using these services should be able to get the private health insurance rebate only where they are safe, clinically effective and cost effective.

Promote an affordable and sustainable private health insurance sector

In 2012-13, the Department worked with the Private Health Insurance Administration Council (PHIAC) to streamline how premiums are increased. The new process went smoothly and will continue to be discussed between stakeholders, PHIAC and the Department.

Top of Page

Outcome 9 – Financial Resource Summary

Program (A) Budget Estimate 2012-13
$’000
(B) Actual 2012-13
$’000
Variation (Column B minus Column A)
$’000
Program 9.1: Private Health Insurance
Administered Expenses
Ordinary Annual Services (Annual Appropriation Bill 1) 2,591 2,581 ( 10)
Special appropriations
Private Health Insurance Act 2007
- Private Health Insurance Rebate 5,135,350 5,184,345 48,995
- Risk Equalisation Trust Fund 420,195 403,202 ( 16,993)
- Council Administration levy 6,226 6,226 -
Departmental Expenses
Departmental Appropriation 1 11,410 11,422 12
Expenses not requiring appropriation in the current year 2 321 500 179
Total for Program 9.1 5,576,093 5,608,276 32,183
Outcome 9 Totals by appropriation type
Administered Expenses
Ordinary Annual Services (Annual Appropriation Bill 1) 2,591 2,581 ( 10)
Special appropriations 5,561,771 5,593,773 32,002
Departmental Expenses
Departmental Appropriation 1 11,410 11,422 12
Expenses not requiring appropriation in the current year 2 321 500 179
Total expenses for Outcome 9 5,576,093 5,608,276 32,183
Average Staffing Level (Number) 63 67 4
  1. Departmental appropriation combines 'Ordinary annual services (Appropriation Bill 1)' and 'Revenue from independent sources (s31)'.
  2. 'Expenses not requiring appropriation in the budget year' is made up of depreciation expense, amortisation, make good expense and audit fees. This estimate also includes approved operating losses - please refer to the departmental financial statements for further information.

Top of Page