The last few years have seen a ‘crisis in confidence’ in Australia’s private health insurance (PHI) industry.
Rising premiums versus flat salaries are making it increasingly tough for providers to demonstrate value for money to an already unconvinced consumer base.
Further fueling this skepticism, Labor’s recent proposal to conduct an industry-wide review and impose a 2% cap on premiums is being seen by many as an admission of the shortcomings of the market.
Shaun Gath is former CEO of the PHI Administrative Council (PHIAC), the agency formerly responsible for the sector’s prudential oversight and regulation.
In advance of his presentation at the Health Insurance Summit – 31 May- 1 June in Sydney – he offers us some exclusive and refreshing insights from his new position on the industry sidelines.
“The current market for PHI services is significantly impaired”, says Shaun. “There are lots of factors that damage or outright restrain competitive behavior. And ultimately, this limits consumers’ capacity to make effective and informed choices”, he said.
“Greg Hunt is implementing a product labelling system which should improve transparency. While I applaud this initiative – assuming it is effectively implemented – there is still so much to do beyond this single measure. The market continues to have key, fundamental challenges it needs to address”.
“Labor has proposed a two-year cap on premiums. As a former prudential regulator, I well understand that these sorts of measures, while no doubt popular, can lead to catch up issues in subsequent years”.
“Labor has coupled this, however, with a promise of a Productivity Commission review of the whole private health sector. That type of review, as we learned back in 1997, has the potential to really shake things up. The future for PHI is uncertain, but it will certainly be interesting”.
As political parties scramble for a solution, the Health Insurance Summit will offer a balanced set of government and industry perspectives on how the sector should move forward.
Leveraging his seven years’ experience as PHIAC CEO, Shaun will take a critical and candid look at proposed and existing PHI policies, outlining his key concerns and suggestions for a more effective PHI market.