Private health insurance reforms: Private patients in public hospitals

The Commonwealth and most states and territories have signed a Heads of Agreement to underpin public hospital funding arrangements from 2020-21.

Page last updated: 16 July 2018

Private health insurance reforms: Private patients in public hospitals (PDF 154 KB)

As part of this agreement, the parties will work together to develop reforms to improve admission policies and practices to support patients in electing to be treated as private or public patients in public hospitals.

Why is this important?

  • The Australian Government is committed to ensuring a sustainable balance between our public and private health systems.
  • The use of private health insurance by patients in public hospitals has increased significantly in recent years.
  • Growth in the number of patients using their insurance in public hospitals over the last five years has contributed about 0.5% a year to premium increases (see Table 1 attached).
  • The median waiting times for elective surgery for public patients in public hospitals is 42 days, compared with 21 days for privately insured patients in public hospitals (see Table 2 attached).

Who will benefit?

  • Patient rights will continue to be protected and respected when it comes to their choice to access public hospital services as a public patient, free of charge, or be treated as a private patient in a public hospital.
  • The premiums paid by people holding private health insurance may decrease if the number of privately insured patients in public hospitals is reduced.
  • The rights of doctors to treat privately insured patients in public hospitals will be supported.

What impact will this change have on private health insurance?

Any changes to patients using their private health insurance in public hospitals will support the sustainability of the public and private health systems. It is important that any action taken by one part of the system does not inappropriately change the balance and disadvantage patients and/or other parts of the system.

Table 1: Impact on premiums of growth in privately insured patient numbers in public hospitals
2010-11
2011-12
2012-13
2013-14
2014-15
2015-16
2016-17
Compound average growth rate
Privately insured admissions - rates per 1000 insured
Public hospitals
48
52
57
61
65
68
72
6.9%
Private hospitals (including day hospitals)
274
279
281
293
300
306
316
2.4%
Privately insured admissions in public hospitals ('000)
Actual
495
551
623
681
733
770
816
If growth had matched private hospitals
495
521
537
572
596
611
630
Total hospital benefits paid ($m)
Actual
9701
10605
11335
12359
13281
13905
14591
7.0%
If growth had matched private hospitals
9701
10536
11133
12112
12961
13530
14153
6.5%
Table 2: Median waiting time (days) for patients admitted from public hospital elective surgery waiting lists by funding source, 2016–17
Public patients
Private health insurance
Intended procedure
Median waiting time
Median waiting time
Cataract extraction (with or without intra-ocular lens insertion)
109
30
Cystoscopy
24
21
Skin lesion—excision of
26
21
Hysteroscopy, dilatation and curettage
24
18
Tonsillectomy (with or without adenoidectomy)
121
54
Cholecystectomy (open/laparoscopic)
43
27
Total knee replacement
211
76
Inguinal herniotomy/herniorrhaphy
56
26
Arthroscopy
71
41
Herniorrhaphy
67
44
Hysterectomy (abdominal/vaginal/laparoscopic)
57
28
Total hip replacement
126
60
Carpal tunnel release
59
35
Other procedures
26
16
Total
42
21