December 4, 2015
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Medibank welcomes the Australian Government’s consultation into the future of private health
insurance policy. As Australia’s leading private health insurer, Medibank looks forward to working
with stakeholders from across the private health sector to improve transparency, affordability and
value for consumers. Medibank has provided a detailed submission to the Australian Government
setting forth its approach to these goals. This Summary Position Statement outlines these
initiatives and is provided in the interests of furthering public debate on this important policy area.
□ □ □
Private healthcare has played an integral part in the well-being of Australians for decades,
improving access, choice and health outcomes. However, driven by a sustained rise in benefits
paid for healthcare services, private health insurance is facing a significant challenge. Premiums
have been increasing by up to 6.5 percent per year over the past decade, a trend that contains
significant implications: left unchecked, private health costs could nearly double over the next ten
years.
A key factor behind the growth in premiums is Australia’s ageing population. The participation
rate of the over-65 population is the fastest growing segment of the insurance market, increasing
from 42 to 52 percent over the past ten years. This trend is set to only increase in the future and
because older people tend to consume more healthcare than those aged under 65, there is a
pressing need for insurers and providers to minimise avoidable admissions through prevention
and disease management programs.
Costs are also rising due to market failures. In some cases, today’s regulatory settings have lost
relevance and weakened competition leading to low-value practices that come at the expense of
consumers. Addressing such regulatory issues would redistribute value to consumers, in the
process creating a more transparent and customer-centred private health system.
Medibank notes the ongoing review of private healthcare is not happening in a vacuum – parallel
efforts include the Medicare Benefits Schedule Review Taskforce, the Primary Health Care
Advisory Group, the Harper Competition Policy Review, and the Reform of Federation discussion.
Medibank welcomes the opportunity to consult on these reforms to ensure that they collectively
further the three principles defined above.
GUIDING PRINCIPLES FOR PRIVATE HEALTH REFORM
The proposed recommendations in this submission all share the common trait of being
consumer-centred. Medibank has focused on three guiding principles to benefit consumers:
transparency, affordability, and value. We believe addressing these three elements for all
Australians is a shared goal of Medibank, the Australian Government, and the broader healthcare
community. Below is a brief definition of each guiding principle:
■ Transparency, in this context, means making insurance cover and health information
understandable and accessible for consumers and the healthcare community.
Transparency benefits consumers in three ways. First, consumers can make informed
decisions about their coverage and care, and avoid unpleasant surprises, thanks to simpler
cover and better information. Secondly, providers can use wider information sources to
make better care decisions. Finally, insurers can use member data to better prevent and
manage diseases, thereby improving outcomes and reducing premiums.
■ Affordability refers to maintaining overall premiums and out-of-pocket healthcare costs
at a level that motivates consumers to participate in private health insurance. Affordability is
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a priority for Australians: personal disposable income has fallen for four quarters in a row,
for the first time in 50 years, while debt-to-income ratios have tripled to 152 percent since
the 1990s.1
Driven by benefit outlays, premiums have risen by an average of over 6 percent over the
past five years, causing many policyholders to downgrade or cancel their private cover. This
has a significant knock-on effect on public access to care. Increasing the affordability of
private health insurance is thus essential to sustaining the national health system.
■ Value is defined as improving the quality and efficiency of the consumer offering, regardless
of the overall price level of a product. This focuses on eliminating waste and delivering high
quality healthcare, which is pivotal to long-term sustainability. For instance, insurers should
have the incentive and mandate to better manage their aged and chronically ill populations
outside of hospitals. The importance of creating value for consumers needs to be
considered hand-in-hand with affordability.
NEAR-TERM RECOMMENDATIONS ON WHICH GOVERNMENT SHOULD ACT
Medibank recommends seven specific regulatory changes – linked to the guiding principles of
transparency, affordability and value – that together could create up to $3 billion of value for
consumers and in doing so lower premiums by up to 16 percent. This, in turn, will increase
the attractiveness of private insurance and reduce the pressure on taxpayer funded public
providers.
Medibank recommends the Australian Government adopt the following seven interrelated
reforms:
1. Improving information sharing for consumers and insurers – Improving transparency of
price, performance and quality information for consumers, providers and insurers would
contribute to better choices, better health outcomes and greater efficiency. Consumers need
more information to make better decisions in choosing providers and services, such as user-
friendly comparisons of cost and quality. Transparency can also be improved by making the
obtaining of consumers’ properly informed financial consent compulsory for providers before
they provide healthcare services. Publicly reporting quality metrics for healthcare providers
has also been demonstrated internationally to encourage better health outcomes. If made
publically available, Australian Government-held health data (such as MBS and PBS data)
could give health professionals a more complete picture of a patient’s health background,
resulting in better care decisions. With permission from their members, insurance companies
could use individual health data to offer targeted prevention, early intervention and pathway
management. Improved transparency is beneficial for the entire health system.
2. Standardise and simplify benefits, terminology and cover – Consumers would benefit
from simpler cover with clear terminology and the removal of restricted services. An industry-
agreed definition of a minimum-coverage product with no restricted services, no contract
based co-payments and increased excess limits, would contribute to fewer negative surprises
for consumers. Designing products to reduce unnecessary variation in referrals to services
such as rehabilitation is estimated to hold between $150 million and $330 million alone in
benefit reduction potential. Whilst delivering cost savings, this reform would primarily improve
transparency for consumers.
3. Ending cost-shifting from public hospitals to privately insured consumers – There is
significant flow of value from privately insured consumers to public hospitals, as public
hospitals increasingly encourage privately covered members attending public hospitals to use
their private health cover. In doing so, many patients are pressured to waive their right to
access universal public hospital services at no cost, as provided for, and paid for by, all
Page | 4
citizens. Restriction of billing by public hospitals to private insurers, and regulation prohibiting
public hospitals to discriminate against privately insured patients, would result in a projected
$510 million to $1,030 million in cost savings. This reform would primarily improve
affordability.
4. Introduce prosthesis reference pricing – The current prices set in the Prostheses List are
inflated relative to peer health systems domestically and overseas, benefiting manufacturers
and private hospitals at the expense of consumers. A reference pricing system for
prostheses, using domestic and international benchmarks, could return an estimated $800
million to Australian consumers. Furthermore, while the Prostheses List aims to insulate
suppliers from considering cost in selecting prostheses, some private hospitals are favouring
certain suppliers in exchange for large discounts. This reform would primarily improve both
value and affordability.
5. Restrict the impact of second tier default – Privately insured people are currently denied
the full benefits of competition for the cost of hospital care by the second-tier default safety
net. This safety net requires insurers to pay uncontracted hospitals a high minimum fee for
service. This has led to large hospital provider groups holding disproportionate power over
contract negotiations, driving up costs and therefore premiums. Adjusting the second-tier
default rates to reduce providers’ market power, while adopting measures to protect patients
from high hospital co-payments, is estimated to lead to cost savings of between $250 million
and $620 million for consumers. This reform would primarily improve affordability.
6. Reform premium price setting – Allowing private health insurers to make price changes
with the oversight of an independent statutory authority such as the Australian Competition
and Consumer Commission (ACCC), rather than the current system of premium approval by
the Minister for Health, would foster greater price competition and improve the affordability of
private health insurance. An important step for lifting this constraint would be shifting away
from the synchronised 1 April premium adjustment date. Increased price competition is
estimated to reduce consumer premiums by approximately $75 million to $150 million. This
reform would primarily improve value and affordability.
7. Incentivise early uptake of lifetime health cover – Reducing the starting age for Lifetime
Health Cover loadings from 30 to 25 would encourage consumers aged 25-29 to participate
in private health insurance. This would lower the overall risk of the covered pool, leading to
estimated savings for consumers of $110 million. This reform would primarily improve
affordability.
The recommended reforms can greatly improve transparency, affordability and value across the
health system. Transparency is at the forefront with consumers being offered clearer cover and
better information, making product choice easier and more informed. They would also be
equipped to interact with clinicians and consume health services in a more value-conscious
manner. Insurers and providers could draw on public databases to prevent and manage diseases
more effectively, further improving population health.
Consumers would also derive significantly more value from appropriate utilisation of cover and
services. Removing the profit motive from providers’ selection of prosthesis suppliers and
integrating rehabilitation referrals into the patient’s episode of care, are two examples of reforms
which would improve health outcomes for patients as well as value-for-money.
In total the reforms could significantly improve affordability. Together, the seven
recommendations have the potential to decrease consumer expenditure by up to $3 billion
per year, equating to a potential reduction of 16 percent in insurance premiums. Exhibit 1
shows the impact of the reforms on total premiums.
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EXHIBIT 1: POTENTIAL IMPACT OF REFORMS ON AFFORDABILITY
POLICY OPTIONS WHICH RISK HARMING AFFORDABILITY, TRANSPARENCY
AND VALUE
We believe the seven reforms described above can substantially improve the Australian private
health system. However, there are currently three additional options which have been suggested
by various entities which we view as a significant threat to the sustainability of private healthcare.
We describe these three issues and outline our concerns below:
1. Introducing risk rating in private health insurance – Community rating allows for
affordable, equitable and inclusive private health insurance coverage for all Australians by
ensuring high-risk and elderly consumers do not have to pay excessive private health
insurance premiums. Moving to risk rating without protecting affordability for members aged
over 60 is projected to increase premium costs by up to $2.5 billion per annum for this
segment, which would translate into a 41% participation decline for older Australians.
Community rating should be maintained to uphold private health insurance as an essential
and accessible part of our healthcare system.
2. Broadening the GST to healthcare, including private health insurance premiums –
Imposing Goods and Services Tax (GST) on private health insurance premiums would
decrease participation in private health insurance, with negative consequences for the public
healthcare system. The GST loading would effectively increase premiums by nearly $2 billion
per annum. Keeping private health insurance premiums GST free will support the affordability
of private health insurance and preserve the affordability of the overall Australian healthcare
system.
3. Removing or reducing the rebate on general treatment cover – The general treatment
rebate supports affordable premiums for consumers and encourages participation in hospital
insurance. Modelling shows that a million Australians receiving this rebate could be driven
away from general treatment insurance if the rebate were removed, and hundreds of
thousands could downgrade. Many of these would also drop or reduce their hospital cover.
800
250–620
150–330
110
510–1,030
75–150
Potential impact on premiums$ Millions Percent reductionReform option
Standardise benefits, terminology and payment for hospital cover2
Disclose price, performance and quality1
End cost-shifting from public hospi-tals to privately insured consumers
Introduce prosthesis reference pricing
Restrict the impact of the second tier default
Reduce starting age for lifetime health cover
Reform premium price setting
0.8-1.7
2.7-5.3
4.1
1.3-3.2
0.6
0.4-0.8
Medium to long term, significant consumer value – not calculated
1 Impact from increasing transparency is likely to be large, however this has not been modelled for this submission2 Modelled impact limited to reducing low-value referrals to rehabilitation; total impact likely to be significantly higher
Page | 6
The rebate on general treatment products should be preserved as a critical enabler of
affordable private health insurance.
LONGER-TERM OPTIONS FOR REFORM
In addition to the short-term reforms described above, there are three longer-term measures
which the Australian government should consider to enable additional improvements in
transparency, affordability and value for consumers: (1) switching to a prospective risk
equalisation system; (2) establishing superannuation-like accounts for paying premiums after
retirement, and insurance cover that provides rest-of-life coverage for an upfront lump-sum
premium payment; and (3) incentivising employers with tax benefits to provide private cover to
their employees..
□ □ □
By adopting our proposed seven recommendations, avoiding the three policy options which could
adversely impact privately insured people, and exploring our longer-term reform options
described above, the private healthcare system in Australia can be enhanced to improve
transparency, affordability and value for consumers, leading to increased participation, and
higher-quality care for consumers.
Background: the role of private health insurance in Australia
Australians benefit from a health system that delivers effective and accessible care. We enjoy
a life expectancy of over 83 years and our self-reported health scores are among the OECD’s
highest.2 However, the affordability of this system is becoming increasingly challenged – health
spending has outpaced economic growth for years, rising from 8.3 to 9.8 percent of GDP
between 2003 and 2013.3 At the same time consumers are demanding greater transparency into
their own health data and care.
For over a hundred years, private health insurance has played an integral role in supporting this
system by improving the quality, affordability and access to healthcare in Australia. Today, the
majority of Australians – over 13 million people, representing 56 percent of all Australians – hold
an insurance policy covering them for hospital and/or general treatment.4 In addition, total
Commonwealth and State Government contribution to healthcare – at 6.3 percent of GDP – is
below OECD average.5
Private health insurance helps Australians in two key ways: 1) it provides a greater choice and
range of benefits for consumers, and 2) it supports the public health system by reducing demand
on that system.
PRIVATE HEALTH INSURANCE PROVIDES GREATER CONSUMER CHOICE
Consumers benefit from a greater choice and control, such as choosing to be treated by one’s
own doctor, shorter waiting times for elective surgery, access to services not covered by
Medicare (such as dental, optical and physiotherapy), and having more say over when and where
to be treated.
Australian Government support through the $5.9 billion private health insurance rebate makes
these benefits for Australians possible. It is this rebate, together with our community rating
structure, that puts Australia amongst the leading healthcare countries, with one of the highest
private health insurance participation rates in the world.
PRIVATE HEALTH INSURANCE SUPPORTS THE PUBLIC HEALTH SYSTEM
The private insurance sector supports the public system in several areas, for instance:
■ Hospital admissions – private insurance funds four out of every 10 hospital admissions in
Australia, representing 31 percent of all days of hospitalisation.6
■ Surgical procedures – private insurance funds over 60 percent of elective all surgery in
Australia.7 This reduces waiting times for elective surgery and lowers demand for hospital
beds in the public system.
If the public system were required to cover the private health system’s capacity, it would cost
government an additional $11 billion to $13 billion beyond current expenditure.8
To summarise, Australians currently achieve impressive health outcomes, due in large part to
their complementary public and private health systems. However a combination of demographic
trends, industry dynamics and regulatory issues is making private health insurance less
affordable, creating a need for careful and balanced reform.
Industry Context: the rising cost of healthcare and potential sources of value for consumers
THE RISING COST OF HEALTHCARE
Private insurance is an essential complement to the public health system in Australia. It offers
flexibility and choice to members about the location and timing of their treatment, as well as the
ability to choose their own treatment providers. It also allows for more timely access to care and
offers ancillary services not available through the public healthcare system.
While private healthcare has brought many benefits, its costs are rising. Over the past five years,
total benefit outlays for private hospital and ancillary services grew by 6.6 and 7.2 percent,
respectively, compared with average cost growth of 2.9 percent in public hospitals. This growth
has significant implications: if private health costs continue to grow at the same rate for the next
decade, benefit outlays will double.
As illustrated in Exhibit 2, cost growth is due to a combination of three factors: the increasing
number of participants, increasing episodes per participant, and increasing benefits per episode.
EXHIBIT 2: DRIVERS OF HEALTH CARE COSTS9,10
Total benefit outlays
2.9%
7.2%6.6%
Private -Ancillary
Private -Hospitalcover
Public -Hospital1
CAGR, per cent, 2010-2014
Benefits paid per episodeCAGR, per cent, 2010–14
Number of participantsCAGR, per cent, 2010–14
Episodes per participantCAGR, per cent, 2010–14
2.3%
0.6%2.0%
Private -Ancillary
Private -Hospitalcover
Public -Hospital
2.5%1.6%
Private -Hospitalcover
Private -Ancillary
Public -Hospital
0.5%
1.8% 2.3%2.8%
Private -Hospitalcover
Private -Ancillary
Public -Hospital
X
1 Public hospital expenditure only
Page | 9
As shown above, growth in expenditure is mainly due to increases in service volumes. There are
more people in private healthcare, and they are each consuming more services. Unlike the public
system, private healthcare is unrationed and thus more exposed to increases in demand. Growth
in participation levels have also contributed to the growth in volume.
Another key driver of volume growth is the ageing population. Australia’s over-65 population is
not only growing, but also increasingly participating in private health insurance. As shown in
Exhibit 3, the over-65 segment has shifted from 43 percent to 52 percent of all participating
Australians over the past ten years. This trend is expected to continue, with the private healthcare
system expected to bear an increasing share of the ageing population’s healthcare needs.
EXHIBIT 3: PARTICIPATION RATES IN HOSPITAL COVER BY AGE OVER TIME11
In addition to the rise in service volumes, healthcare prices are increasing across the board,
further increasing the total costs of delivering private healthcare. Exhibit 1 shows benefits per
episode grew by 1.6 percent in private hospital cover, and by 2.5 percent in ancillary cover.
MARKET FAILURES IN THE CURRENT SYSTEM
Private healthcare expenditure has increased by an average of $840 million per year between
2009 and 2015.12 This growth in expenditure has been captured within a concentrated group of
stakeholders in the private healthcare value chain, in the form of higher than normal profits,
leaving other stakeholders in the chain worse off. At the root of these imbalances lie market
failures which have been created by the current system.
0%
10%
20%
30%
40%
50%
60%
70%
706560 9085 95807555453015 5020 3510 405 25
Participation in private hospital insurance by age groupPercent of population, June of each year
Age
2000
20152009
1998
2006
2009
2003
2008
2012
2010
2000
2015est’d
2001
2002
2011
2013
1999
2005
1998
2007
2014
2004
Participation rate
2003
Page | 10
Market failures are dynamics caused by the rules of a governing system, which motivate and
enable stakeholders to capture excess value to the detriment of other stakeholders and/or the
overall system. Regulations governing Australia’s private health system affect decisions and
performance at every stage of the value chain, as stakeholders rationally seek to maximise their
stake in the surplus value.
By way of example, below are some of the current market failures in the Australian private
healthcare system:
■ Prostheses value capture – Australia’s Government regulated Prostheses List sets
minimum reimbursement levels that are nearly twice as high as domestic and international
benchmarks, reducing consumer affordability by up to $800 million per year. Manufacturers
are thus receiving excessive prices (and profits) due to regulation. Furthermore, private
hospitals negotiate bundled discounts with manufacturers, sometimes purchasing
exclusively from a favoured vendor who offers the best discounts. This weakens the
Prostheses List’s intended goal of insulating providers from considering cost in selecting
prostheses.
■ Second tier default benefits for hospitals out of contract with insurers – Currently, the
second tier default benefit arrangements require insurers to pay uncontracted hospitals a
minimum fee for service. This rate is 85 percent of the average paid to comparable
contracted hospitals in that state. Unlike contracted hospitals, non-contracted hospitals are
not restricted in charging additional out-of-pocket costs over and above the fee received
from the insurer, including rates that go beyond the fee that they would have received if
contracted. These arrangements were originally designed to protect small providers in
negotiations, minimising the risk of being out of contract with insurers and providing a fall-
back position. However, this has created an uneven balance of power in negotiations, giving
large providers significant power in negotiation with insurers. Insurers are effectively faced
with the difficult decision of either accepting higher than reasonable rates from providers,
which will drive up member premiums, or risk having members pay significant out-of-pocket
costs on top of the insurer paying near full-amount. In the latter scenario, members are
often required to pay out-of-pocket costs prior to admission – leaving many in a difficult
financial situation at an already stressful time.
■ Increase in rehabilitation referrals – Rehabilitation is a significant expenditure item for
private health insurers, totalling over $600 million per year. Australian Government
legislation mandates minimum benefits payment for same-day and overnight rehabilitation
services, with few safeguards to ensure appropriate usage. As a result, rehabilitation
separations have consistently increased by 15 percent per year, doubling over the past five
years.13 There has been exceptionally sharp growth in rehabilitation services provided in-
house within acute hospitals.
One cause for concern is high variability in referral rates across hospitals – for instance,
rehabilitation referral rates for hip replacements vary between 7 percent and 76 percent
across the 20 highest-volume hospitals. Hospitals with in-house services tend to refer more
patients to rehabilitation, potentially due to the direct financial benefit they receive.
As there is no evidence suggesting that high-referring hospitals have a significantly different
case mix versus the average, these high referrals may provide little or no value to patients.
Proponents have argued better health outcomes with this increase in referrals. However,
Page | 11
many of these health outcomes measures, such as functional independence measure (FIM)
scores, are self-reported by the providers who make the referrals. As examples of the
market failure, Medibank research has uncovered rehabilitation facilities who provide less
than one hour of treatment per day, and facilities where no treatments are provided over the
weekends.
This has significant implications for consumer value and affordability: if high-referring
hospitals achieved average overnight rehabilitation referral rates, total rehabilitation
expenditure would decrease by approximately $150 million per year. Bringing hospitals to
top-quartile referral rates would increase consumer savings to $330 million per year.
■ Over-servicing induced by fee-for-service structure – Healthcare professionals are
compensated on an activity basis for virtually all services. This can create ‘supply-induced
demand,’ wherein providers financially benefit from prescribing and delivering treatments,
even in cases where patients derive little or no benefit.
Furthermore, the current MBS structure requires insurers to pay for listed procedures
regardless of evidence of efficacy for the procedure or value to the patient. An independent,
systematic review of MBS items has identified thirteen procedures with significant
expenditure with little, no, or unproven value such as arthroscopic surgery for knee
osteoarthritis and surgery for obstructive sleep apnoea.14 These procedures are sometimes
used in favour of evidence-based and more cost-effective, alternative treatments.
Medibank supports the ongoing reviews of primary healthcare and the MBS, which are
addressing this challenge through measures such as defining narrower patient profiles for a
given procedure, limiting the maximum frequency of procedures, and potentially moving
towards a value-based or capitated model. The recommendations below are consistent with
this direction – for instance, connecting data sources on cost and health outcomes can shed
light on priority areas where the current funding model may not be appropriate.
While many market failures are driven by the regulatory system, some are not motivated by
regulations. They are instead caused by inadequate contractual arrangements between insurers
and providers, such as the increase in case mix upcoding, or by the lack of disincentives, such as
medical specialist out-of-pocket maximums. While some insurers are working to correct such
issues, they persist and in doing so impact on consumer value-for-money. Two examples of such
market failures are described below.
■ Increase in case mix upcoding – There has been a pronounced trend towards higher-
complexity coding from private hospitals: Category A benefits, for Diagnosis Related Group
(DRG) episodes with the most complex case mix, have increased by 7.3 percent per year,
while Category D benefits, for the least complex case mix, have declined by 3.7 percent per
year. Category A now comprises a full third of patients, versus a fifth in 2010. This growth
rate is more than twice as high as the growth rate of Australia’s over 65 population,
suggesting that changing demographics can only explain a small part of this trend.
High variance in incorrect coding suggests that some providers may tend to over-claim high
complexity. In a recent audit of 6,400 Category A cases across 36 private hospitals in
Australia, Medibank found ‘error’ rates ranging from 6.8 percent to 39.2 percent, with an
average of 13.5 percent. Exhibit 4 below illustrates this variation in error rates. Since
insurers can only process 10 percent of questionable claims, and hospitals are not
penalised for coding incorrectly, the current system may create a bias towards ‘upcoding’.
Page | 12
EXHIBIT 4: DRG CODING ERROR RATES ACROSS AUDITED HOSPITALS
This trend has significant financial implications. If Category A expenditure had grown in line
with Category B and C over the last 4 years, then total 2015 benefits would be $420 million
lower than actual levels. As less than half of this can be explained by demographics, the
balance is effectively a transfer of value from consumers – through higher benefits, and
thus premiums – to private hospitals.
■ Variation in out-of-pocket costs charged by medical specialists – Many medical
specialists are billing more in out-of-pocket expenses than Medicare and private health
insurance benefits paid, and this billing behaviour is highly correlated with the
socioeconomic status of patient pools. In some cases, provider charging appears truly
extreme: Medibank claim records demonstrate one medical specialist charged $678,000 in
out of pocket expenses over the period of a year, for just 180 billed services in addition to
claiming Medicare and private health insurance benefits.
If it were possible to link specialist billing behaviour with health outcomes then arguably
such variation in charging practices could be justified. Unfortunately while such data
undoubtedly exists it is unavailable to consumers, leaving them with little information to
make informed decisions on medical specialists – a classic example of market failure.
IMPACT ON CONSUMER AFFORDABILITY AND VALUE
One consequence of these market failures is that healthcare is expensive in Australia compared
to other countries. Domestic price levels for medical procedures were over twice the level of
most European countries for hospital services in 2011. Similarly, an international comparison of
9%
16%
7%
11%
24%
22%
14%
39%
19%
Percentage error rate by hospital, 2014-15
Page | 13
six comparable countries in 2013 found total physician and hospital costs for hip replacements
and bypass surgery in Australia were second only to the United States. In this analysis, the cost
of hip replacements in Australia was 38 percent higher than New Zealand, and more than
double the cost in the Netherlands.15
The increase in prices cannot be explained by increasing complexity of procedures alone: the
cost of the same procedure in Australia is more expensive than in other countries. For instance,
Exhibit 5 shows the average invoice cost for cataract surgery in Australia was greater than that
for other comparable healthcare systems, including the United States and New Zealand.
EXHIBIT 5: COST OF CATARACT SURGERY IN SIX HEALTHCARE SYSTEMS16
A 2014 report by the Grattan Institute reported a similar variability in the cost of care in the
public healthcare system, where costs in some hospitals were two to three times more than
others in the same state to deliver the same care.17
□ □ □
The accelerated growth in healthcare costs, driven by both price and volume, and the
disproportionately high profit margins of some of the stakeholders in the private health insurance
value chain are ultimately hurting consumers. Reforms need to address the market failures
described above, and others, to recoup excess pools of profit for Australian consumers. The
reform goal is to bring more transparency to the private health insurance industry, make
premiums more affordable, and deliver better value-for-money to consumers.
3,8413,762
3,384
2,016
1,610
1,038
AustraliaNetherlands United StatesNew ZealandArgentina Spain
Average invoice cost; US$, 2013
About Medibank
About Medibank
At Medibank, we stand For Better Health.
These three simple words sit at the heart of everything we do. They define why we exist and what
we stand for. For Better Health means seeing every interaction with our members as an
opportunity to build a relationship. It means we promise three things:
■ Better Choices – we help members make positive health decisions and feel in control of
their health.
■ Better Confidence – we ensure members feel confident about their health and offer genuine
peace-of-mind.
■ Better Outcomes – we advocate for an improved health system that produces quality health
outcomes at a sustainable cost.
We provide health insurance under two brands: Medibank and ahm. Our Medibank brand delivers
a premium, full-service offering, giving Medibank members better access to health services and
advice. Our ahm brand is focussed on giving members maximum value. Altogether we cover 3.8
million private health insurance members Australia wide.
To better meet their needs, today and into the future, we are pioneering a range of innovative
healthcare initiatives. Our approach to optimising health is guided by the “Triple Aim of
Healthcare”, developed by the Institute of Healthcare Improvement, and focusses on the following
elements:
We further extend our health expertise to other populations. This is most clearly seen in our
management of the national, integrated healthcare system for the Australian Defence Force. This
system provides seamless access to quality healthcare for over 80,000 ADF personnel – from
point of injury or illness to recovery. We are proud of the role we play in delivering care to this
important group and the position of trust we have established.
Medibank is also one of the largest telehealth providers in Australia, delivering a range of
publically available healthcare services via phone, online and video, including nurse triage, health
coaching and mental health counselling services.
Page | 15
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11 Internal Medibank Analysis
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viewed 3 December 2015, http://www.apra.gov.au/PHI/Publications/Pages/Statistical-
Trends.aspx
13 Medibank analysis of internal hospital separations data
14 Elshaug AG, Watt M, Mundy L, Willis CD 2012, ‘Over 150 potentially low-value health care
practices: an Australian study’, Medical Journal of Australia, vol 197, no. 10, pp 556-560.
15 International Federation of Health Plans 2013, Comparative Price Report: Variation in Medical
and Hospital Prices by Country.
16 International Federation of Health Plans 2013, Comparative Price Report: Variation in Medical
and Hospital Prices by Country.
17 Duckett, SJ 2014, Controlling costly care: a billion dollar hospital opportunity, Grattan Institute,
Melbourne.
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