Now, an overhaul of the private health insurance is promising simpler and more affordable cover. In the biggest shake-up the industry has seen, the Federal Government will today announce reforms which include discounts for young people, boosting mental health benefits, new product ratings for all health policies with four levels of cover: gold, silver, bronze, and basic, cost cuts for cardiac and orthopaedic implants like pacemakers and knee replacements, as well as a greater role for the ombudsman to keep tabs on those health insurers.
Federal Health Minister Greg Hunt joins me from Melbourne.
Thanks for joining us. Health insurance premiums have increased by an average 5.6 per cent a year since 2010, that’s double, almost triple the inflation rate. How are these changes going to bring costs down?
Well, the package is very clear, it’s about ensuring that health insurance is simpler and more affordable.
For young people, we’re looking at discounts of up to 10 per cent. We know that many young people want private health insurance, they simply can’t afford it and so it’s bringing that private health insurance into their range of affordability.
It’s about taking pressure off premiums for everybody and then extending coverage for mental health, for people in rural and regional areas.
So to make a real difference both to the coverage, but also making it simpler and ultimately more affordable.
That’s terrific, but everyone can’t be a winner. How’s it going to be funded? Is the cost being shifted to oldies, or is the Government kicking in?
No, what’s happening here is that the biggest driver of reduction in cost is an agreement with the medical device makers, the people who make things such as prosthetic knees or hips that might be implanted, or you mentioned pacemakers and other cardiac devices, they have accepted a reduction of $1 billion in payments over the course of the next four years.
They’ve been given very high payments. That will flow straight through to reduce premiums and we’ve got the agreement with the private health insurance sector to pass those costs on.
So it’s real reform, that at the end of the day delivers a package which is simpler for people, so as there were no surprises, reduced pressure on premiums with discounts for young people who are desperate to get private health and then better mental health coverage and better rural and regional coverage.
So these device makers and the pill makers have been ripping us off, have they?
Well, let’s put it this way, with time, we’ve been able to get discounts and reductions in their costs and as technology has gone ahead, they’ve been charging a certain amount.
We’ve struck an agreement where they’ll accept $1 billion of lower costs. In return, I’ve got to say for us, improving the speed at which these new devices are brought to market, so they get to market more quickly, we get lower costs.
So the public wins on both front, they get more devices sooner, but at a lower cost, which flows directly through to the premiums, which allows for the mental health and the rural and regional coverage.
Fair enough. Good news, Minister. Thanks for joining us.
Thanks very much, Kochie.