Online version of the 2013-14 Department of Health 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: 31 October 2014

Major Achievements

  • Simplification of the Base Premium Measure, reducing red tape for insurers.
  • Improved stakeholder consultation and relations through increased engagement.
  • Further streamlining of health insurance premium round processes.

Challenges

  • Supporting the timely development and implementation of changes to simplify the Base Premium Measure.

Looking Ahead

In 2014-15, the Department will implement the 2014-15 Budget measure to freeze indexation of income thresholds and means testing of the Australian Government rebate on private health insurance until 1 July 2018. The Department will also implement Budget measures to transfer the functions of the Private Health Insurance Ombudsman to the Office of the Commonwealth Ombudsman, and abolish the Private Health Insurance Administration Council and transfer its primary function to the Australian Prudential Regulation Authority.

Programme Contributing to Outcome 9

  • Programme 9.1: Private health insurance

Division Contributing to Outcome 9

In 2013-14, Outcome 9 was the responsibility of Medical Benefits Division.

Outcome Strategy

Outcome 9 aims to improve the choice in health services by supporting affordable quality private health care through private health insurance rebates and a regulatory framework. In 2013-14, the Department worked to achieve this Outcome by managing initiatives under the programme outlined below.

Programme 9.1: Private health insurance

Programme 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

To ensure that the growth in the Private Health Insurance Rebate is sustainable into the future and assist with the deregulation agenda of the Government, the Department implemented a simplified Base Premium measure that restricted rebate growth to Consumer Price Index (CPI). The original measure would have been cumbersome to administer and difficult for consumers to understand. The Department worked closely with industry to simplify the arrangements. The simplified approach reduced the potential complexity for consumers and delivered regulatory savings for industry.

Qualitative Deliverable
Insurers affected by changes to the Australian Government rebate on private health insurance are adequately informed of these changes
2013-14 Reference Point
Stakeholder discussions will be undertaken to convey the relevant information
Result
Met
The Department regularly engaged in major consultations with stakeholders and issued circulars where appropriate to update stakeholders. Additional and extended engagement with stakeholders ensured that simplification of the Base Premium changes could be achieved prior to the implementation date.

Ensure the Australian Government rebate on private health insurance covers clinically proven treatments

The evidence-based review of natural therapies, which was due to be completed in 2013-14, was extended by the Government to 1 April 2015. The extension will allow the Department, in conjunction with the Office of the National Health and Medical Research Council, to complete a full evidence-based review process in consultation with industry.

Qualitative Deliverable
Stakeholders informed of the review’s progress, findings and subsequent regulation changes
2013-14 Reference Point
The review’s progress will be reported on the Department’s website. Stakeholders will be advised of the findings and subsequent regulation changes prior to the review’s implementation date
Result
Met
The Department’s website was updated regularly on the review’s progress. Following the completion of the review, any changes to natural therapies that attract the rebate are expected to be implemented from 1 April 2015.

Improve access to prostheses through private health insurance

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 2013-14, the Department continued to work with stakeholders to establish transparent pathways for assessment of new products, introduction of a process to validate benefits for listed products, and ongoing improvements in managing the Prostheses List.

Qualitative Deliverable
Recommendations of the Health Technology Assessment Review are implemented to ensure consumers have access to no gap prostheses arrangements under the prostheses schedule
2013-14 Reference Point
Grouping and benefit assignment process is finalised in 2013-14. Prostheses Listing arrangements are streamlined for all stakeholders and consumers have access to clinically effective prostheses with a group benefit and no gap payments
Result
Substantially Met
The Prostheses List Advisory Committee has made significant changes to listing processes to ensure transparency, clarity and consistency in decision making for stakeholders. These changes ensure that clinically effective prostheses are available and that products listed in the Prostheses List are fully reimbursable in accordance with Prostheses List arrangements.

Promote an affordable and sustainable private health insurance sector

The Department worked with Government and stakeholders to further streamline the Premium Approval Process. The Department worked with industry to reduce the time taken to submit and assess premium increases.

Quantitative Deliverable
Percentage of insurers’ average premium increases publicly released
2013-14 Target
100%
2013-14 Actual
100%
Result
Met
Quantitative KPI
Maintain the number of people covered by private health insurance hospital treatment cover
2013-14 Target
10.3m
2013-14 Actual
11.1m
Result
Met
The number of people with hospital cover has reached 11.1m (47.2% of the Australian population). This is the highest participation rate in more than 26 years.

Participation in Private Health Insurance continued to rise in 2013-14. Over 13.0 million Australians or 55.3 per cent of the population had some form of private health insurance. This has grown from 11.6 million Australians or 52.5 per cent of the population in 2009-10.

Of these people, 11.1 million have some form of hospital cover (47.2 per cent), an increase of 1.1 million since 2009-10.

Outcome 9 – Financial Resource Summary

(A) Budget Estimate 1
2013-14
$’000
(B) Actual 2013-14
$’000
Variation (Column B minus Column A)
$’000
Programme 9.1: Private Health Insurance
Administered Expenses
Ordinary Annual Services (Annual Appropriation Bill 1)
5,247
2,346
( 2,901)
Special appropriations
Private Health Insurance Act 2007
– Private Health Insurance Rebate
5,529,862
5,608,642
78,780
– Risk Equalisation Trust Fund
455,241
424,434
( 30,807)
– Council Administration levy
6,590
6,590
Departmental Expenses
Departmental Appropriation 2
13,169
12,911
( 258)
Expenses not requiring appropriation in the current year 3
585
559
( 26)
Total for Programme 9.1
6,010,694
6,055,482
44,788
Outcome 9 Totals by appropriation type
Administered Expenses
Ordinary Annual Services (Annual Appropriation Bill 1)
5,247
2,346
( 2,901)
Special appropriations
5,991,693
6,039,666
47,973
Departmental Expenses
Departmental Appropriation 2
13,169
12,911
( 258)
Expenses not requiring appropriation in the current year 3
585
559
( 26)
Total Expenses for Outcome 9
6,010,694
6,055,482
44,788
Average Staffing Level (Number)
75
73
( 2)

1 Budgeted appropriations taken from the 2014-15 Health Portfolio Budget Statements and re-aligned to the 2013-14 programme group structure.

2 Departmental appropriation combines ‘Ordinary annual services (Appropriation Bill 1)’ and ‘Revenue from independent sources (s31)’.

3 ‘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. Some reclassifications have been made to the Budget estimates to more accurately reflect the allocation of departmental depreciation by outcome.