Having received exceptional protection and support for the past decade and a half, the health insurance industry enters 2016 seeking to push younger people into private cover and demanding yet another round of premium rises.
The suggestion from some health funds that adults in their 20s be drawn into health insurance is the latest evidence of how the federal government's subsidy and regulation of private healthcare has generated a sense of entitlement among health funds, without any clear benefit for consumers and taxpayers.
After years of increasingly interventionist regulatory protection and many billions of dollars in taxpayer-funded aid meant to spur health insurance, we are left with chronically increasing premiums and chronically confused and frustrated consumers.
Putting patients in better control of making decisions about their care achieves better outcomes and reduced costs.
Some insurers seek to improve information to consumers about policy inclusions, provider fees, performance and availability but self-regulation in this regard has failed to deliver.
What's needed now is a balance of regulation and competition. The government has embarked on a quick review of private insurance in response to deepening consumer and taxpayer disquiet about the financial cost, complexity and questionable benefit of health insurance.
A survey conducted recently by the Consumers Health Forum found serious and widespread doubts among those with private health insurance about the value of their policy. While two-thirds of policyholders who responded sought protection from high costs in taking out insurance, only 30 per cent were satisfied that their policies kept such costs manageable.
The forum believes there is a way of better directing the rebate to achieve a clearer, more competitive, higher-value health insurance system. We have named this initiative, which shifts greater control to the consumer, myCover.
In its submission to the review, the forum proposed that, under myCover, the rebate be payable only for policies that meet legislated standards of simplicity, clarity and comparability for hospital cover. The purpose of this is not only to ensure consumers can easily understand and compare policies but also to sharpen competition and transparency among health funds and protect consumers from signing up to "junk" policies. In short, it would equip consumers to make a real choice.
The myCover hospital packages would be developed jointly with consumers, health insurers, clinicians and private hospitals and would be backed by readily accessible information about fees, performance and availability of specialists and other providers to whom patients have been referred. Coverage would be restricted to therapies and products that are evidence-based.
The insurers would still be able to compete to offer non-standardised policies but these would not qualify for the rebate. And there would be measures aimed at high-priced prostheses used in private care to bring down costs.
The forum believes there is scope for innovative approaches to general cover policies under myCover that encourage people to self-insure for the costs of private allied health such as dental services, which could attract a matched government contribution. Again, this would shift greater purchasing power to the consumer.
It is speculated that the Turnbull government is toying with a momentous rearrangement of the financial support for private healthcare – removing the insurance rebate and replacing it with direct federal funding of private and public hospital care via a voucher system.
We trust that such a fundamental step would be made only after a thorough and transparent examination of the consequences, its impact on individual coverage, value for money, and the effect of weakening the health funds' role in negotiating hospital charges.
Now, nearly half of the population have felt it necessary to take out insurance. But the "incentive" of the 30 per cent tax rebate has been all but lost for many families, who face $4000 annual premiums or more for a typical policy. Underlying all of the regulatory carrots and sticks is the dread of public hospital waiting lists for elective surgery, which drive many people to take out insurance.
Yet research by the Melbourne Institute of Applied Economic and Social Research indicates that the health insurance rebate looks an expensive and ineffective way of reducing public hospital waiting lists. It found that savings from reducing spending on health insurance rebates would outweigh the predicted increase in public hospital costs by a factor of 2.5.
The notion that the rebate supports "choice" in healthcare has proven largely illusory given most face little real "choice" of surgeon in terms of quality or price and the scarce information presently available.
If we are to continue with the rebate, surely it needs to have a stronger rationale and be better targeted. The forum's myCover proposal provides a fresh and effective way of deploying it to the benefit of consumers, taxpayers and Australia's health. And it would provide real choice.
Leanne Wells is the chief executive of the Consumers Health Forum of Australia.