Advancing sustainable solutions at the upcoming FOHS

What are you most looking forward to at this year’s Future of Health Seminar?

Australia, as most people acknowledge and research supports, has a world-class health system – but it is a system under pressure: financial, technological and demographic. Those who argue that reducing support for private healthcare is a way of relieving that pressure are mistaken; such a path would lead to greater pressure on state systems, longer waits and unsustainable budget growth.

As the recently appointed independent chair of Private Healthcare Australia (PHA) I am looking forward to participating in policy discussions at the Seminar, which will contribute to the sustainability of our unique blended model of public-private healthcare and, in particular, the Government’s second wave of private health insurance reforms.

At the Future of Health Seminar, you will be presenting on matters that look at how we can ‘advance sustainable solutions’. What is one thing which you want the audience to learn from this discussion?

It is important to understand that increasing healthcare costs are impacting both the private and public sectors and the private health insurance rebate is critical to maintaining balance in our health system. We constantly hear in the media about the “affordability crisis” in the private health system and the exodus of people from private health insurance, but the challenges regarding escalating costs are just as relevant to the public sector.

Under the latest COAG agreement, the States receive a 6% increase per year in public hospital funding, while health fund premiums increased by 3.25% this year, the lowest in almost two decades.

The fact is our health system is under strain, we have an ageing population, technological advances in healthcare cost money and the expectations of the community are ever-increasing.  The private sector does take pressure off the public hospital system and in order to ensure the sustainability of our health system, the approach to policy should be positive and cooperative. 

More than half of the Australian population, 13.6 million people have some form of private health insurance. The sector understands that consumers are worried about increasing costs and is working with the Government and stakeholders to keep premiums as low as possible.

The private health insurance rebate is a proven means of keeping low and middle-income Australians who want to use the private system in private health insurance. The rebate is means-tested and figures from the ATO show that more than half of the 13.6 million people who hold PHI have disposable incomes under $50,000 per annum. Many of these are full pensioners and superannuants who are making considerable sacrifices to maintain their health insurance.

The PHI rebate has been eroded in recent years due to a number of policy decisions by both sides of Government and is now at around 25%. Restoring the PHI rebate to 30% for low and middle-income Australians will help to keep the private sector healthy and take pressure off our public hospitals.

Following your retirement from politics, what attracted you to devote your time to the healthcare space?

I was Health Minister in South Australia from 2005 to 2013 so I suppose improving the healthcare of Australians is part of my DNA. I have always thought our mixed health system was the best model. As Health Minister I used to regularly check the number of people with private health ­insurance. When it went down, I would worry as it would put more pressure on our public hospitals.

Consumers value choice and the private sector offers that. Our research shows that as people get older, they also value the ‘Peace of mind’ that private health insurance gives them. It is a safety net for the ‘what if’ situations in life.

The private sector is also critical to a strong public health system because it takes pressure off public hospitals and reduces wait times for everyone.  I believe there are a number of measures we can introduce to improve the system and I hope to use my experience to bring them to fruition. I’m looking forward to helping steer PHA through the next wave of PHI reforms.

What do you believe is a major flaw of the health system in Australia?

There’s no doubt Australia’s healthcare system is under pressure and in need of further reform. The system is never going to be complete and perfect, you just have to keep adjusting all the ­levers because the circumstances continually change.

However, as I have always said Australia has one of the best health systems in the world. We can always improve but if you were extremely unwell, Australia is a good country to find yourself in.  

What do you think optimal healthcare looks like? Can it be achieved?

It’s a fact of life that Governments have a limited bucket of money. With this in mind an optimal healthcare system would deliver the best available care to its population – wherever they live. It would focus on prevention, easy access to primary health care, early diagnosis and treatment and sophisticated integration across caregivers and institutions. It would be a system without waste, one that provides for those who cannot afford to pay for own healthcare but also provides incentives for those who can, so they take some financial responsibility for their own care.

What can actuaries do to help build sustainable solutions in Australian healthcare?

The important role for actuaries in the healthcare sector is to use their skills and expertise to provide accurate forecasts and thereby contribute to the development of valuable policy.

Data analysis is becoming increasingly important in the healthcare sector. As costs increase and our ageing population rightly demands better health outcomes, we must ensure the available funding is directed efficiently and effectively and that Australian consumers are getting value across our mixed health system.  Australia’s health system is among the best in the world and all sectors need to work cooperatively to keep it that way.

To hear more from John, register now for the FOHS – to be held 23 October 2019 at the Grand Hyatt Melbourne.

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