Urgent reform is needed to better support expectant mothers and save maternity wards at risk of closure due to rising treatment costs and a shortage of specialists.
Compare the Market Economic Director, David Koch, is calling on the government to rethink the private health tier system, in light of a growing number of services closing their doors. His calls echo messaging from Private Healthcare Australia, which is calling for an overhaul of the current tiering of health insurance products.
The issue has forced some expectant mothers to travel hours or stay interstate to receive the services and benefits they’ve paid for.
“The tiered system as it currently sits isn’t quite working. We’ve ended up with policies that are not only expensive for maternity patients, but fall short of funding the services required,” Mr Koch said.
“When we have mothers in North Queensland travelling to the Gold Coast or Canberra to have their baby in a private hospital, there is a problem with the system. And when the private system suffers, that has ripple effects on public services too.”
In April 2019, the Federal Government introduced four tiers for private hospital cover – Basic, Bronze, Silver and Gold – designed to be easy for the everyday Australian to understand.
But clustering the most expensive services in the highest tier, has made these policies unsustainable for health funds, leaving hospitals and service providers with budget holes.
Recent research by Catholic Health Australia revealed that at least ten maternity hospitals had closed since 2017, largely due to workforce shortages.
Mr Koch said reforms were needed to properly fund and staff services at risk of financial failings due to rising costs. Until things change, patients will continue to face uncertainty and large out-of-pocket costs.
“Many take out Gold Hospital Cover thinking they’ll only need to pay their premiums and excess for the obstetric-related services, but the reality is often not the case,” Mr Koch said.
“In regional areas, we’re also seeing a shortage of healthcare professionals who provide care relating to these obstetric-related clinical categories, meaning some patients are being turned away or forced to seek treatment elsewhere.”
According to the Department of Health and Aged Care’s Medical Cost Finder, which looks at the in-hospital costs only, a natural delivery with no complications will typically cost $2,900 in specialist fees. Of this, the patient is usually left with $400 out-of-pocket after Medicare and their insurer typically pays $1,700. On top of that, there is an average cost of $6,100 for hospital fees, which may cover things like accommodation, theatre and medical devices. The private health insurer generally covers all or most of this cost.
A caesarean section with no complications leaves 61% of women with out-of-pocket costs, which is typically $500 for specialist fees not covered by health insurers or Medicare. It’s even higher for women who experience complications during their birth, and out-of-pocket costs are the last thing they need to be worrying about during such a difficult time. These costs are only the in-hospital component and do not account for any fees attributable for out of patient obstetric services prior to admission, which can blow out the budget further.
What’s alarming is that these costs are in addition to what families have already paid on their health insurance premiums.
What does reform look like?
The current tier system includes Basic, Bronze, Silver and Gold categories, as well as ‘Plus’ versions of Basic, Bronze and Silver policies. These ‘Plus’ categories, that have become popular over the years, could be part of the problem. They cover the compulsory clinical categories of a regular policy plus some additional clinical categories from the tier above.
Many Australians effectively take out a lower-level policy that cherry-picks some benefits, treatments and services from the higher level of cover, often with a smaller price tag, but it’s rarely an option for pregnancy and birth-related services. Removing the ‘Plus’ categories could bring costs down for Australians who have Gold.
The Government could also investigate whether the current Medicare Benefits Scheme (MBS) could factor in additional costs for Gold services so people aren’t left with as many out-of-pocket expenses.
The MBS is a price set by the government which is considered to be a reasonable amount to charge for different types of medical treatments. When you are admitted to hospital as a private patient, Medicare covers 75% of MBS fee, and your health insurer covers the remaining 25%, provided the treatment is medically necessary, included on your policy, and any relevant waiting periods have been served. If the specialist charges more than the MBS, you may be required to pay some or all of the difference. And that’s the increasing trend we’re seeing – particularly around pregnancy and birth services.
“It’s critical that health insurers, peak bodies, private hospitals and governments work together on a solution so Australians can continue to access world-class hospital care without paying substantial out-of-pocket costs for the benefit,” Mr Koch said.
“Knowing reforms can take years to implement this issue should be made a top priority. Without change we’ll continue to see services fail, and stress added to what should be an exciting time for new parents.”
For more information, please contact:
Phillip Portman | 0437 384 471 | [email protected]
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