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Going private in the public hospital: patients are the losers in a riven health system

A graphic in an article in the Sydney Morning Herald last week, illustrates a growing unease about whether the increasing trend for privately insured patients to undergo treatment as private patients in public hospitals is resulting in a two-tiered public system.

Using data drawn from an AIHW report, Private health insurance use in Australian Hospitals 2006–07 to 2015–16, the figure demonstrates much longer public hospital waiting times for public than private patients for a range of surgical procedures.

This is in the context of an overall increase in private health insurance-funded hospitalisations in public hospitals, rising from 382,000 in 2006–07 (8.2% of all hospitalisations) to 872,000 in 2015–16 (13.9%), with marked state-by state variations.

These data are complex, as are the factors that see many patients “opting” to use their private health insurance for treatment in public hospitals. The report and its interpretation have proved controversial.

In the post below, veteran health reporter, health advocate, and communications director at the Consumers Health Forum of Australia, Mark Metherell, says the report shines a light on the “tangle of conflicting interests that bedevil the relationship between public hospitals and private health funds, and between the federal government and state and territory governments, over hospital funding.”

He argues that current government support for private health insurance is a threat to equity, and requires a thorough re-think.


Mark Metherell writes

The latest figures showing a dramatic increase in privately insured patients undergoing treatment in public hospitals over the past decade, has once more exposed our faltering adherence to the Medicare ideal of equity of access to universal health care.

The AIHW data reveal not only that the number of private patients receiving public hospital care has surged, but that there is also a yawning gulf in waiting times for elective surgery, favouring private over public patients.

A fractured system

The ensuing war of words between the interested parties has served to highlight the tangle of conflicting interests that bedevil the relationship between public hospitals and private health funds, and between the federal government and state and territory governments, over hospital funding.

The Federal Health Minister, Greg Hunt, says the differences in public hospital waiting times for public and private patients are “shocking”. The private health funds and private hospitals are calling for new curbs on the use of private insurance in public hospitals.  Meantime the public hospitals umbrella group, The Australian Healthcare and Hospitals Association (AHHA), rejects suggestions that public hospital doctors might be favouring private patients.

Welcome to Australia’s riven health “system” where the public hospitals chase those who can afford health insurance while those who can’t afford it wait longer; where health insurance subsidies were introduced to ease pressure on the public system but have only served to contribute to more insured people seeking gap-free care at public hospitals; and where health funds (along with their members), would pay more for private hospital care, but argue that public hospital “patient harvesting” should cease.

Calling for a rebalance

The potential bright spot is that the Federal Health Minister’s expressed shock at this state of affairs is accompanied by more scrutiny of the equity issues, whereby private patients receive faster treatment than public patients.

Mr Hunt says the state and territory governments “must stop this practice at the expense of their public patients.” He has discussed it recently with other health ministers at the COAG Health Council meeting and now says the AIHW data show urgent action is needed.

The question for the states and territories is where the foregone money currently gleaned from private patients is to come from, to meet public hospital patient demand?

Vulnerabilities and loopholes

The issue exposes the awkward vulnerability of our mixed public-private health system:  private insurance is imposed on people with a mix of subsidy carrots and tax sticks, and accepted on the understanding that people who are insured will get treatment when they need it, while the uninsured have to wait.

Those waits were graphically highlighted by the AIHW figures showing that privately insured patients waited a median 20 days compared to 42 days for public patients for elective surgery (page 80). With knee replacement surgery, private patients waited 76 days and public patients 203 days (page 83).

A lack of transparency remains, around the processes by which hospital executives and medical specialists and surgeons choose between insured and uninsured patients for priority attention.

The commonly accepted understanding is that Medicare requires that every Australian should be treated in public hospitals on the basis of clinical need, however there is a little known wrinkle in that provision that was made largely unnoticed nearly 20 years ago.

A senior federal health bureaucrat, Charles Maskell-Knight, told a Senate committee hearing into health insurance recently that there was “a misconception that the Medicare principles require access to services within public hospitals to be based on clinical need.”

That was the case between 1984, when Medicare began, until 1998. But, said Mr Maskell-Knight, in 1998 the then Australian Health Care Agreements were changed and the relevant principle was that public patients “should receive care on the basis of clinical need within clinically appropriate periods.”

Asked by Greens Leader Senator Richard Di Natale what that meant for private patients, Mr Maskell-Knight replied: “That hospitals may differentiate in favour of them.”

Would such an arrangement be viewed as acceptable by the majority of Australians who pay taxes but don’t have insurance?

Subsidising inequity?

The Consumers Health Forum has long argued for a Productivity Commission inquiry into the provision of government subsidies for private health insurance.  Depending on how it is measured, the financial assistance the government provides to health insurance is in the order of between $6 billion and $11 billion.

The steady rise in health insurance premiums accompanied by often shrinking benefits, which themselves prompt more members to seek public hospital care, all raise questions about the value for money health insurance provides.

The evidence of the growing negative impact health insurance is exerting on equitable access to hospital care adds weight to the call for a thorough examination of private health insurance.

*Mark Metherell is communications director of the Consumers Health Forum.  These are his views and not necessarily the views of the Consumers Health Forum.

 

 

 

 

 

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Population Health Congress 2015
2016 conferences
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2017 conferences
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Australian Palliative Care Conference
2018 conferences
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