A federal government “prostheses list” sets the amounts funds must pay for more than 10,000 prostheses and implanted medical devices, and insurers have long complained they are significantly higher than what is paid in Australia’s public health system and in comparable countries.
New analysis of healthcare system data by PHA shows the price of four leading-brand hip replacement devices, at $10,477, is double the price in New Zealand and the UK, and triple the price in France.
The $2484 insurers pay for four common heart stents is twice as high as in France and three times as high as in New Zealand and the UK. Australian insurers would save $28 million a year if they paid New Zealand prices for those stents, based on how many of the products they paid for last year.
Craig Drummond, chief executive of the nation’s largest health insurer, Medibank, said it was “unreasonable” that Australians were paying these prices through their insurance premiums and that “unquestionably, more needs to be done”.
“Clearly, the pricings that we are still paying for devices compared to global benchmarks and the public system are still well in excess of where they should be,” Mr Drummond said. “We don’t want people dropping out of the system … but we have to change, and this is part of the change.”
Private Healthcare Australia chief executive Rachel David said Mr Hunt’s deal with medical device-makers to cut the cost of their products by $250 million this year had failed to lower insurers’ costs, because it had accompanied an “out of proportion” 8.6 per cent increase in the use of devices in surgery – even as the number of procedures remained relatively flat.
That meant funds’ spending in the area fell only $13 million last year, Dr David said, after they had agreed to premium increases of just 3.25 per cent – the lowest rise in 17 years – on the basis of the promised savings. A second round of price cuts will come into effect next year.
Dr David said a single body, the Independent Hospital Pricing Authority, should be put in charge of setting device prices in both the public and private systems, to ensure health funds were not paying too much.
“It’s one of the few issues that needs to be addressed on the cost side if we’re to maintain the very equitable system we have at the moment and keep it affordable,” Dr David said.
Mr Drummond said the government procuring devices for both the public and private health sectors “makes a lot of sense”, pointing to the Pharmaceutical Benefits Scheme as an effective model.
Ian Burgess, chief executive of device manufacturers group the Medical Technology Association of Australia, said significant differences between countries’ healthcare systems rendered comparisons on prices his members charge invalid.
He said moving to national procurement would take choice away from doctors and move decision-making to insurers, and was in effect a call for a “managed care” system.
“Clearly, this is an orchestrated campaign to achieve higher premium increases and/or cuts to device pricing, which would just further increase insurers’ profits,” Mr Burgess said.
Data from the Australian Prudential Regulation Authority shows 65,000 fewer Australians had health insurance in December 2018 compared to a year earlier, with younger people – who make claims less often and subsidise the care of older members – dropping out at the fastest rate.
Business reporter at The Age and Sydney Morning Herald.