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The role of private health insurance in chronic disease management

The prevention and management of chronic disease is one of the biggest challenges facing our health system. Potential solutions often focus on the public health system but private health insurance has also played a role in this area since 2007, when then Health Minister Tony Abbott introduced some reform measures to give insurers incentives to keep members out of hospital.  Despite the significant public investment in private health insurance, these measures have not been formally evaluated. However, Amanda Biggs, from the Parliamentary Library has produced an excellent paper Chronic Disease Management: the role of Private Health Insurance outlining private health funds chronic disease management activities and analysing the available evidence of their efficacy. She also makes a number of sensible recommendations for future research and evaluation in this area.

The introduction to the paper is reproduced below, with the Library’s permission, and the entire document can be accessed from their website at http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library

Amanda writes:

In 2007, a series of major reforms to private health insurance (PHI) were introduced with the passage of the Private Health Insurance Act 2007 (PHIA). One of the key reforms, in fact ‘the most significant new measure’ according to the then Health Minister Tony Abbott, was Broader Health Cover (BHC). BHC allows health insurers to offer benefits to members for programs that either prevent or substitute for hospitalisation, or that help patients with a chronic disease better manage and reduce the effects of that disease.  In effect, these reforms were intended to give health insurers a more significant role in keeping their members healthy.

A range of benefits was expected to flow from this initiative. Evidence from overseas shows that patients covered by such programs stay healthier for longer, and have their chronic conditions better managed.Health insurers could benefit because over time they would face fewer, less expensive claims. PHI members could benefit as well, as fewer expensive claims should reduce some of the cost pressures that drive health insurance premiums to rise. More broadly, the health system could benefit because a healthier population should reduce pressure on public hospitals, as well as reduce costs overall.

Several years have passed since the introduction of BHC so it is timely to look at its implementation and begin to assess its impacts. As a preliminary step, this paper will focus on reporting on the uptake of BHC services, including the range of chronic disease management programs (CDMP) now available, the benefits paid for these and any evidence pointing to the effectiveness of these programs.

Whether BHC has benefited the health system and led to lasting improvements in health outcomes is probably too early to say. A wide range of variables would need to be considered and given the multidimensional and complex nature of the system it may be too difficult to assess this. Instead, this paper aims to fill some gaps in knowledge about the implementation of BHC, in order to contribute towards a better understanding of the role such programs can play, and to promote further debate and investigation. Because health insurance is subsidised by the Australian taxpayer via the private health insurance rebate, there is also a public interest in a better understanding of the impact of these programs.

The paper starts by providing some brief background information on private health insurance arrangements, as well as the challenges emerging from increasing rates of chronic disease, before moving to a discussion of BHC and its role and making recommendations for future research in this area.

 

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