Government takes scalpel to devices that push up price of our premiums

The federal Department of Health will again try to make medical devices cheaper, hoping to reduce pressure on premiums.

Apr 19, 2021, updated Apr 19, 2021
The Morrison Government has quietly introduced further reforms to assist the private health insurance industry. (Supplied)

The Morrison Government has quietly introduced further reforms to assist the private health insurance industry. (Supplied)

Health insurers have long pointed to the cost of devices on the private sector’s Prostheses List as an area in which reforms could bring savings. Some implantable devices cost significantly more than they do in the public sector, and the federal Coalition government has taken some tentative steps towards reform.

However, the disruption of the pandemic prompted the government to put any such reform work into “hibernation” while also allowing device sponsors a 50 per cent reduction in annual regulatory charges.

Over summer, the department re-engaged with stakeholders and found support for reference pricing to close the gap between average prices in the public sector and benefits payable through the Prostheses List.

Many stakeholders agree that some items have been incorrectly listed, however the is disagreement on whether the list itself should be consolidated.

“All stakeholders have agreed that reform is needed,” the department reported back.

“However, opinion remains divided about which options would work best.”

The department is preparing advice for the government, with a view to changes being factored into insurers’ applications for premium increases due to come into effect on April 1 next year.

“Subject to Government approval, it is likely that reform would commence from February 2022, although improvements could commence sooner,” the department said.

The timing also allows for promises of a health insurance overhaul to again feature in the federal election campaign.

When premiums last increased, earlier this month, the insurance lobby released an analysis showing some devices cost more in Australia than other countries.

“Medical device costs are the largest contributor to the rise in private health insurance premiums, and the Morrison Government must do more to protect Australian consumers,” Private Healthcare Australia CEO Rachel David said at the time.

But Medical Technology Association of Australia CEO Ian Burgess accused insurers of trying to distract from “unjustifiable back-to-back premium increases and to push the Federal Government into radical, so called, reforms that would abolish patient access and surgeon choice guaranteed by the Prostheses List”.

The government has a strategic agreement with the MTAA that expires in January 2022.

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