Push for new Senate Inquiry to review private health insurance out-of-pocket expenses

6 April 2017


The Australian Physiotherapy Association (APA) welcomes the Nick Xenophon Team’s push for a Senate Inquiry into out-of-pocket expenses associated with private health insurance.

Out-of-pocket health insurance costs can be a barrier to Australians getting the care they require for their health needs. Many people put off seeing a physiotherapist when they first become injured or ill due to large out-of-pocket expenses. This often causes a delay to them seeking treatment, which can result in a longer recovery time, as well as putting a further cost burden on the economy due to time off work sick.

Phil Calvert, National President of the Australian Physiotherapy Association, said: “Private health insurance is an important part of Australia’s health system, but it needs to work much more flexibly with consumers across a range of areas to ensure they are getting value for money.”

“Currently, the out-of-pocket expenses many consumers are faced with as part of their ancillary cover are a disincentive to accessing quality physiotherapy treatment when it is needed. With appropriate early intervention treatment, the overall impact and cost to the health system can be reduced, which will result in improved quality of life and increased economic productivity.”

“It doesn’t make sense that the current private health insurance system makes people pay out-of-pocket costs which could be completely avoided if they were covered in the first instance for preventive treatment.”

The APA urges the Senate Inquiry to review several aspects of private health insurance out-of-pocket expenses, including the option for insurers to provide consumers with a “set and review” policy – to elect to contract to stay with an insurer for a couple of years (for example) if that helps ensure that the investment made in preventive care policy models is worthwhile for the insurer.

The Senate Inquiry must also include a review of the transport and accommodation costs incurred by consumers travelling from rural and remote areas of Australia to access health facilities and practitioner expertise found only in cities and large regional centres. In these instances, consumers are left with no other choice than to pay for substantial travel and accommodation costs as their private health insurance does not cover this. For rural Australians, this is not a level playing field. Providing rebates for physiotherapy care as a first line, preventive health measure before a condition deteriorates would help consumers avoid a later, large out-of-pocket expense for their condition.

The distinction between “hospital” and “general” (or ancillary) health insurance provides incentives for some people to stay overnight in hospital (fully covered by insurance) if the alternative is to pay out-of-pocket expenses for a condition that could be treated in the community, i.e. as part of their “general” cover. For cost-sensitive consumers, this becomes a more attractive option. The Senate Inquiry must explore better ways for “hospital” and “general” cover to work as one for the benefit of consumers.

One example is when patients are discharged from hospital after a joint replacement. It is a cost saving for the insurer to discharge the patient early into community care, but there is often no incentive for the patient to do this given their out-of-pocket expenses are likely to be larger using physiotherapy in the community as opposed to in-patient treatment.

Private health insurers are able to create funding models that minimise out-of-pocket expenses. The APA believes the Senate Inquiry should look at incentives for insurers to do this for both preventive care and early intervention treatments. These models have the potential to make a significant difference to the health system as a whole, but especially to the out-of-pocket costs consumers currently face.

Finally, the Senate Inquiry must also look at the impact of annual caps on cover, and the option to carry over unused cover, rather than have a “use it or lose it” model.

During the September 2016 quarter, private health insurers paid $3.675 billion in hospital treatment benefits. In contrast, they paid $101 million for ancillary physiotherapy benefits. A small investment in preventive physiotherapy treatment is likely to pay for itself many times over by reducing the overall number and duration of hospital stays.

The APA believes a Senate Inquiry into out-of-pocket insurance expenses will uncover significant incentives for health insurers to provide better models of insurance cover that minimise out-of-pocket expenses and allow consumers to access preventive and early intervention physiotherapy treatments when required.




For further information, please contact: Julie Dwyer, Communications Manager
T 03 9092 0810 M 0419 176 075  E Julie.Dwyer@physiotherapy.asn.au


About the Australian Physiotherapy Association (APA)

The APA is the peak body representing the interests of Australian physiotherapists and their patients. It is a national organisation with state and territory branches and specialty subgroups. The APA represents more than 23 000 members who conduct more than 23 million consultations each year. To find a physiotherapist in your area, visit www.physiotherapy.asn.au/findaphysio