Outcome I09

Section 2 – Department Outcomes – 9 Private Health

Outcome9

Private Health

Improved choice in health services by supporting affordable quality private health care, including through private health insurance rebates and a regulatory framework

Outcome Strategy

The Australian Government, through Outcome 9, aims to promote the sustainability of private health insurance and support consumer choice in health care. The Government is committed to ensuring that Australians have access to private health insurance through a viable and costeffective private health industry. With incentives such as the Australian Government rebate on private health insurance, a fair and equitable reimbursement framework for surgically implanted prostheses, the Medicare levy surcharge and Lifetime Health Cover, the Government will continue to encourage and support individuals and families to purchase private healthinsurance.

The Australian Government will maintain the regulatory framework that includes obligations around community rating,[1] default hospital benefit payments, maximum waiting periods, and portability.[2] The Government will ensure health providers benefiting from private health insurance payments meet quality requirements, including accreditation.

Outcome 9 is the responsibility of Medical Benefits Division.

Program Contributing to Outcome 9.1

Program 9.1: Private Health Insurance

Outcome 9 Budgeted Expenses and Resources

Table 9.1 provides an overview of the total expenses for Outcome 9 by program.

Table 9.1: Budgeted Expenses and Resources for Outcome 9

2012-13Estimatedactual
$'000 / 2013-14Estimatedexpenses
$'000
Program 9.1: Private health insurance
Administered expenses
Ordinary annual services (Appropriation Bill No. 1) / 2,591 / 5,247
Special appropriations
Private Health Insurance Act 2007
- private health insurance rebate / 5,135,350 / 4,916,721
- risk equalisation trust fund / 420,195 / 470,534
- council administration levy / 6,226 / 6,590
Departmental expenses
Departmental appropriation1 / 11,410 / 11,365
Expenses not requiring appropriation in the budget year2 / 321 / 434
Total for Program 9.1 / 5,576,093 / 5,410,891
Outcome 9 totals by appropriation type
Administered expenses
Ordinary annual services (Appropriation Bill No. 1) / 2,591 / 5,247
Special appropriations / 5,561,771 / 5,393,845
Departmental expenses
Departmental appropriation1 / 11,410 / 11,365
Expenses not requiring appropriation in the budget year2 / 321 / 434
Total expenses for Outcome 9 / 5,576,093 / 5,410,891
2012-13 / 2013-14
Average staffing level (number) / 68 / 67

1Departmental appropriation combines "Ordinary annual services (Appropriation Bill No 1)" and "Revenue from independent sources (s31)".

2"Expenses not requiring appropriation in the Budget year" is made up of depreciation expense, amortisation expense, makegood expense and audit fees.

Program9.1: Private health insurance

Program Objectives

Ensure the sustainability of the private health insurance rebate

The Australian Government aims to make expenditure on the private health insurance rebate sustainable through income testing of recipients, removal of the rebate on lifetime health cover loadings, and indexing the Government’s contribution by the lesser of Consumer Price Index or the actual increase in commercial premiums, while ensuring that it continues to provide assistance to those who need it most. The Department will work with the Australian Taxation Office, the Department of Human Services and private health insurers to inform consumers and implement the changes.

Ensure the Australian Government rebate on private health insurance covers clinically proven treatments

In 2012-13 the Government announced a review of the rebate on private health insurance for natural therapies. The Department will work with the National Health and Medical Research Council to complete the review in 2013. Following completion of the review, the Government will introduce, through Regulation, a list of natural therapies underpinned by a robust evidence base that will continue to receive a rebate. It is expected that the Regulation will take effect on 1January2014.

Promote an affordable and sustainable private health insurance sector

The Australian Government will undertake discussions with industry and consumer groups on options for further improvements to premium setting that will drive competition and continue to deliver strong consumer protection.The Department will continue to publish information about the premium approval process including average premium increases for individual insurers.[3]

Improve access to prostheses through private health insurance

The Australian Government is implementing a fair and equitable prostheses reimbursement framework to ensure private health insurance expenditure is directed to clinically and cost-effective prostheses with minimal co-payments forpatients. During 2013-14, the Department will continue to implement the recommendations from the Review of Health Technology Assessment in Australia (HTA Review) (December 2009). This will include furtherdeveloping evidence based processes for listing of new prostheses and the review of listed prostheses to enhance public confidence in the process through improved outcomes. The Department will continue to develop an online system for submitting and processing applications to list prostheses on the Prostheses List and will continue to consultwith stakeholders on ways to support Prostheses List arrangements to achieve cost-effective and clinically appropriate outcomes.

Program 9.1 is linked as follows:

  • The Department of Human Services (Services to the Community – Program1.1) to administer Lifetime Health Cover mail-out and the private health insurance rebate.

Program 9.1: Expenses

Table 9.2: Program Expenses

2012-13Estimatedactual
$'000 / 2013-14Budget
$'000 / 2014-15Forwardyear 1
$'000 / 2015-16Forwardyear 2
$'000 / 2016-17Forwardyear 3
$'000
Annual administered expenses
Ordinary annual services / 2,591 / 5,247 / 2,247 / 2,247 / 2,247
Special appropriations
Private Health InsuranceAct 2007
- private health insurance rebate / 5,135,350 / 4,916,721 / 5,043,188 / 5,154,310 / 5,255,088
- risk equalisation trust fund / 420,195 / 470,534 / 525,225 / 584,268 / 647,663
- council administration levy / 6,226 / 6,590 / 6,972 / 7,236 / 7,453
Program support / 11,731 / 11,799 / 10,998 / 11,057 / 11,229
Total Program 9.1 expenses / 5,576,093 / 5,410,891 / 5,588,630 / 5,759,118 / 5,923,680

Program 9.1: Deliverables

Qualitative Deliverables for Program 9.1

Ensure the sustainability of the private health insurance rebate

Qualitative Deliverable / 2013-14 Reference Point or Target
Insurers affected by changes to the Australian Government rebate on private health insurance are adequately informed of these changes / Stakeholder discussions will be undertaken to convey the relevant information

Ensure the Australian Government rebate on private health insurance covers clinically proven treatments

Qualitative Deliverable / 2013-14 Reference Point or Target
Stakeholders informed of the review’s progress, findings and subsequent regulation changes / The review’s progress will be reported on the Department’s website
Stakeholders will be advised of the findings and subsequent regulation changes prior to the review’s implementation date

Improve access to prostheses through private health insurance

Qualitative Deliverable / 2013-14 Reference Point or Target
Recommendations of HTA Review are implemented to ensure consumers have access to no gap prostheses arrangements under the prostheses schedule / Grouping and benefit assignment process is finalised in 2013-14
Prostheses Listing arrangements are streamlined for all stakeholders and consumers have access to clinically effective prostheses with a group benefit and no gap payments

QuantitativeDeliverables for Program 9.1

Promote an affordable and sustainable private health insurance sector

Quantitative Deliverable / 2012-13 Revised Budget / 2013-14 Budget
Target / 2014-15 Forward
Year1 / 2015-16 Forward
Year2 / 2016-17 Forward
Year3
Percentage of insurers’ average premium increases publicly released / 100% / 100% / 100% / 100% / 100%

Program 9.1: Key Performance Indicator

QuantitativeKey Performance Indicator for Program 9.1

Promote an affordable and sustainable private health insurance sector

Quantitative
Indicator / 2012-13 Revised Budget / 2013-14 Budget
Target / 2014-15 Forward
Year 1 / 2015-16 Forward
Year 2 / 2016-17 Forward
Year 3
Maintain the number of people covered by private health insurance hospital treatment cover / 10.3m / 10.3m / 10.3m / 10.3m / 10.3m

1

[1]Community rating means that all consumers pay the same premiums for the same policy, regardless of factors including age or health status.

[2]Portability means that consumers have the right to transfer to a comparable level of cover for hospital treatment with another health insurer without having to re-serve waiting periods.

[3]Available at: <