As a Health Fund created by doctors and for doctors, we have been a voice advocating for reform of the private health insurance industry, including in the heavily regulated area of prostheses pricing. It’s been one of the hottest topics in the industry this year and generated plenty of media coverage. 

In February Federal Minister for Health, Sussan Ley, announced the federal government would make prosthesis reform a priority through the creation of an industry working group (IWG) comprising health insurers, device manufacturers, hospitals, doctors and consumers. 

Consequent to consultations with the IWG, in October the Minister announced price reductions to a number of lens, hip, knee and cardiac medical devices (prostheses) effective from February 2017 – totalling $86 million in forecast savings for the industry next year. To put the forecast savings into perspective, they constitute less than one per cent of the $10.04 billion in hospital benefits that health insurers paid in the year ending 30 June 2016.(1) Put another way, the saving equates to $7.61 per annum for each of the 11.3 million people currently with private hospital cover in Australia.(2) 

We welcome any reform to the current regulations that require prostheses to be sold in the private hospital system at set prices: often far more expensive than the same devices sold to public hospitals. However there is a long way to go with reform in this area. 

In line with our commitment to you as valued members, we are proud of our record of having the lowest average rate of premium increase in the industry for 2015 and 2016. We will be passing on the modest savings we are forecasting from the change to lens, hip, knee and cardiac prostheses in our annual premium adjustments in April 2017.

A potential catalyst for further reform came from the Australian Parliament in November when Senators Nick Xenophon and Stirling Griff called for an inquiry into prostheses pricing regulation. This is likely to see the increased scrutiny over prostheses pricing continue into next year. 

(1) Private Health Insurance Statistical Trends, Australian Prudential Regulation Authority, June 2016. 

(2) The Operations of Private Health Insurers 2015-16, Australian Prudential Regulation Authority.