Outcome 9
PRIVATE HEALTH
Improved choice in health services by supporting affordable quality private health
care, including through private health insurance rebates and a regulatory framework
Outcome Strategy
The Australian Government, through Outcome 9, aims to promote the
sustainability of private health insurance and support consumer choice in health
care. The Government is committed to ensuring that Australians have access to
private health insurance through a viable and cost-effective private health
industry. With incentives such as the Australian Government rebate on private
health insurance, a fair and equitable reimbursement framework for surgically
implanted prostheses, the Medicare levy surcharge and Lifetime Health Cover, the
Government will continue to encourage and support individuals and families to
purchase private health insurance.
The Australian Government will maintain the regulatory framework that includes
obligations around community rating,1 default hospital benefit payments,
maximum waiting periods, and portability.2 The Government will ensure health
providers benefiting from private health insurance payments meet quality
requirements, including accreditation.
Outcome 9 is the responsibility of Medical Benefits Division.
Program Contributing to Outcome 9.1
Program 9.1: Private Health Insurance
1
Community rating means that all consumers pay the same premiums for the same policy, regardless of factors
including age or health status.
2
Portability means that consumers have the right to transfer to a comparable level of cover for hospital treatment
with another health insurer without having to re-serve waiting periods.
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Outcome I 09
Section 2 – Department Outcomes – 9 Private Health
Budget Statements – Department of Health and Ageing
Outcome 9 Budgeted Expenses and Resources
Table 9.1 provides an overview of the total expenses for Outcome 9 by program.
Table 9.1: Budgeted Expenses and Resources for Outcome 9
Program 9.1: Private health insurance
Administered expenses
Ordinary annual services (Appropriation Bill No. 1)
Special appropriations
Private Health Insurance Act 2007
- private health insurance rebate
- risk equalisation trust fund
- council administration levy
Departmental expenses
Departmental appropriation1
Expenses not requiring appropriation in the budget year2
Total for Program 9.1
Outcome 9 totals by appropriation type
Administered expenses
Ordinary annual services (Appropriation Bill No. 1)
Special appropriations
Departmental expenses
Departmental appropriation1
Expenses not requiring appropriation in the budget year2
Total expenses for Outcome 9
Average staffing level (number)
1
2
2012-13
Estimated
actual
$'000
2013-14
Estimated
expenses
$'000
2,591
5,247
5,135,350
420,195
6,226
4,916,721
470,534
6,590
11,410
321
11,365
434
5,576,093
5,410,891
2,591
5,561,771
5,247
5,393,845
11,410
321
11,365
434
5,576,093
5,410,891
2012-13
68
2013-14
67
Departmental appropriation combines "Ordinary annual services (Appropriation Bill No 1)" and "Revenue from
independent sources (s31)".
"Expenses not requiring appropriation in the Budget year" is made up of depreciation expense, amortisation
expense, makegood expense and audit fees.
162
Program 9.1: Private health insurance
Program Objectives
Ensure the sustainability of the private health insurance rebate
The Australian Government aims to make expenditure on the private health
insurance rebate sustainable through income testing of recipients, removal of the
rebate on lifetime health cover loadings, and indexing the Government’s
contribution by the lesser of Consumer Price Index or the actual increase in
commercial premiums, while ensuring that it continues to provide assistance to
those who need it most. The Department will work with the Australian Taxation
Office, the Department of Human Services and private health insurers to inform
consumers and implement the changes.
Ensure the Australian Government rebate on private health insurance covers clinically
proven treatments
In 2012-13 the Government announced a review of the rebate on private health
insurance for natural therapies. The Department will work with the National
Health and Medical Research Council to complete the review in 2013. Following
completion of the review, the Government will introduce, through Regulation, a
list of natural therapies underpinned by a robust evidence base that will continue
to receive a rebate. It is expected that the Regulation will take effect on
1 January 2014.
Promote an affordable and sustainable private health insurance sector
The Australian Government will undertake discussions with industry and
consumer groups on options for further improvements to premium setting that
will drive competition and continue to deliver strong consumer protection. The
Department will continue to publish information about the premium approval
process including average premium increases for individual insurers.3
Improve access to prostheses through private health insurance
The Australian Government is implementing a fair and equitable prostheses
reimbursement framework to ensure private health insurance expenditure is
directed to clinically and cost-effective prostheses with minimal co-payments
for patients. During 2013-14, the Department will continue to implement the
recommendations from the Review of Health Technology Assessment in Australia
(HTA Review) (December 2009). This will include further developing evidence
based processes for listing of new prostheses and the review of listed prostheses to
enhance public confidence in the process through improved outcomes. The
Department will continue to develop an online system for submitting and
processing applications to list prostheses on the Prostheses List and will continue
to consult with stakeholders on ways to support Prostheses List arrangements to
achieve cost-effective and clinically appropriate outcomes.
3
Available at: <www.health.gov.au/internet/main/publishing.nsf/Content/private-1 >
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Outcome I 09
Section 2 – Department Outcomes – 9 Private Health
Budget Statements – Department of Health and Ageing
Program 9.1 is linked as follows:

The Department of Human Services (Services to the Community –
Program 1.1) to administer Lifetime Health Cover mail-out and the private
health insurance rebate.
Program 9.1: Expenses
Table 9.2: Program Expenses
2012-13
Estimated
actual
$'000
Annual administered expenses
Ordinary annual services
2,591
Special appropriations
Private Health Insurance Act 2007
- private health insurance
rebate
5,135,350
- risk equalisation trust
fund
420,195
- council administration
levy
6,226
Program support
Total Program 9.1 expenses
2013-14
Budget
$'000
2014-15
Forward
year 1
$'000
2015-16
Forward
year 2
$'000
2016-17
Forward
year 3
$'000
5,247
2,247
2,247
2,247
4,916,721
5,043,188
5,154,310
5,255,088
470,534
525,225
584,268
647,663
6,590
6,972
7,236
7,453
11,731
11,799
10,998
11,057
11,229
5,576,093
5,410,891
5,588,630
5,759,118
5,923,680
Program 9.1: Deliverables
Qualitative Deliverables for Program 9.1
Ensure the sustainability of the private health insurance rebate
Qualitative Deliverable
Insurers affected by changes to the
Australian Government rebate on private
health insurance are adequately informed of
these changes
2013-14 Reference Point or Target
Stakeholder discussions will be undertaken
to convey the relevant information
Ensure the Australian Government rebate on private health insurance covers
clinically proven treatments
Qualitative Deliverable
Stakeholders informed of the review’s
progress, findings and subsequent
regulation changes
2013-14 Reference Point or Target
The review’s progress will be reported on
the Department’s website
Stakeholders will be advised of the findings
and subsequent regulation changes prior to
the review’s implementation date
164
Improve access to prostheses through private health insurance
Qualitative Deliverable
Recommendations of HTA Review are
implemented to ensure consumers have
access to no gap prostheses arrangements
under the prostheses schedule
2013-14 Reference Point or Target
Grouping and benefit assignment process is
finalised in 2013-14
Prostheses Listing arrangements are
streamlined for all stakeholders and
consumers have access to clinically effective
prostheses with a group benefit and no gap
payments
Quantitative Deliverables for Program 9.1
Promote an affordable and sustainable private health insurance sector
Quantitative Deliverable
Percentage of insurers’
average premium increases
publicly released
2012-13
Revised
Budget
100%
2013-14
Budget
Target
100%
2014-15
Forward
Year 1
2015-16
Forward
Year 2
2016-17
Forward
Year 3
100%
100%
100%
Program 9.1: Key Performance Indicator
Quantitative Key Performance Indicator for Program 9.1
Promote an affordable and sustainable private health insurance sector
Quantitative
Indicator
Maintain the number of
people covered by private
health insurance hospital
treatment cover
2012-13
Revised
Budget
2013-14
Budget
Target
2014-15
Forward
Year 1
2015-16
Forward
Year 2
2016-17
Forward
Year 3
10.3m
10.3m
10.3m
10.3m
10.3m
165
Outcome I 09
Section 2 – Department Outcomes – 9 Private Health
Budget Statements – Department of Health and Ageing
166