Keeping Premiums Low: Towards a sustainable private healthcare system

The private health insurance system has a critical $1 billion opportunity to reduce costs, limit premium growth and better support Australian health outcomes.

Our report for the Medical Technology Association of Australia (MTAA) addresses growing cost pressures in the private health insurance system that have seen hospital insurance membership rates fall to 11-year lows. Unless affordability improves, Australia risks overburdening its public healthcare system, putting the quality of patient care at risk.

We identify four key opportunities for reform that will put downward pressure on premium growth while underpinning quality and affordability of healthcare in the longer term. An estimated $210 million can be saved by improving the operational efficiency of private health funds, while a further $290 million may be saved by optimising models of care and reducing admissions through prevention and promoting care in the community.

The allied health offering could also be improved, generating nearly $250 million of savings for the private health system, while a further $210 million could be avoided by constraining premium growth among Australia’s top-performing funds.

The report also outlines the role that innovative medical technologies can play in improving quality and affordability of healthcare in the medium to long term. Combined, these levers could see a reduction in premium growth by FY2022 of nearly $1 billion – a nearly 20% reduction in the increase in premiums over this period.

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