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Private health insurnace vital PRIVATE health insurance is an important component of funding of heath care in Australia, providing about 11 per cent of total national health care funding.For insured people it provides added benefits such as choice of doctor, choice of hospital and choice of timing of procedure. Private insurance can also assist with meeting the costs of private sector services which are not covered by Medicare, such as dental, optical, physiotherapy and podiatry services. The Commonwealth regulates insurance offered by registered health insurance organisations to ensure that the principle of community rating is maintained. Community rating means that health funds must charge everyone the same premium regardless of the health status or claims history. This ensures that private health insurance is open to a wide range of people in the community and that the aged and chronically ill are not priced out of private health insurance. In order to support community rating there is a system of "reinsurance" in place which redistributes the costs of claims for the elderly and those in hospital for an extended period across all private health insurance funds. This ensures that health funds with a high proportion of these higher cost members are not disadvantaged. There are over forty private health insurance funds registered by the Commonwealth. Most of these are open to everyone, but some only offer cover to restricted groups such as employees of a particular firm. In order to ensure that there is a balance between the public and private health sectors in Australia the Commonwealth Government has introduced a number of measures to address the affordability, stability and attractiveness of private health insurance. These measures are designed to encourage people to take out private health insurance and decrease the pressure on the public system. For example, the Commonwealth Government introduced a 30% rebate on private health insurance in January 1999. Another initiative introduced by the Government is Lifetime Health Cover. Lifetime Health Cover is a new system of private health insurance designed to encourage people to take out hospital cover early in life and maintain their cover. People who join a health fund before they turn 31 years of age and who stay in private health insurance will pay a lower premium throughout their lives relative to people who delay joining, regardless of their health status. People over the age of 30 will face a 2 per cent increase in premiums over the base rate for every year they delay joining. The benefit is that in the medium to longer term the rate of premium increases will be slowed by discouraging "hit and run" behaviour (where someone joins a health fund just before requiring treatment and then leaves soon after) and by improving the overall health of the membership of private health insurance funds so that the rate of claiming is reduced. |
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