Private Health Insurance Act “ONE YEAR ON – How time flies when you are having fun!”

Themes What was intended to be achieved? What was intended to be achieved? What has been achieved? What has been achieved? Where next? Where next?

Good intentions 1. Minimum necessary regulation 2. Regulation of products not insurer activities 3. Policy aims (bhc, lhc, sis and quality and safety)

New Legislation - Structure The Act provides the backbone The Act provides the backbone The Rules provide the detail The Rules provide the detail The Act is 314 pages (plus Rules) The Act is 314 pages (plus Rules) (effective 1 April 2007) The Rules……. The Rules…….

Legislation – Rules PHI (Incentives) Rules PHI (Risk Equalisation Policy) Rules PHI (Levy Administration) Rules PHI (Prostheses Application & Listing Fees) Rules PHI (Health Benefits Fund Policy) Rules PHI (Prostheses) Rules PHI (Transition) Rules PHI (Council) Rules PHI (Health Benefit Fund Enforcement) Rules PHI (Insurer Obligation) Rules PHI (Health Benefit Fund Administration) Rules PHI (Risk Equalisation Admin) Rules PHI (Levy) Rules PHI (Ombudsman) Rules PHI (Lifetime Health Cover) Rules PHI (Data Provision) Rules PHI (Registration) Rules PHI (Complying Product) Rules PHI (Health Insurance Business) Rules

Minimum necessary? I’ve seen much worse both in drafting and content

Regulation of product Change from conditions of registration to regulating complying health insurance products (CHIPS) Change from conditions of registration to regulating complying health insurance products (CHIPS) Provision of standard product information Provision of standard product information

PHIO Website Part 3-4 (Division 93) of The Act states that funds must ensure that it maintains an up to date Standard Information Statement (SIS) a) for each CHIP it makes available, b) for each CHIP under which it insures people (ie: even closed products)

Product not Insurers? CHIPS concept is sound CHIPS concept is sound Unintended consequences of PHIO site on ‘control of distribution’ Unintended consequences of PHIO site on ‘control of distribution’ Teething pains Teething pains

Policy Aims (LHC) LHC loadings must stop after an adult has had hospital cover for a continuous period of 10 years LHC loadings must stop after an adult has had hospital cover for a continuous period of 10 years (ie: reverts back to an age of entry of 30 years of age) Government mail out in April of each year to all people approaching 31 st birthday Government mail out in April of each year to all people approaching 31 st birthday

Policy Aims (BHC) Broader Health Cover allows insurers to fund services that substitute for or prevent admitted hospital treatment. Broader Health Cover allows insurers to fund services that substitute for or prevent admitted hospital treatment. Barriers to take-up Barriers to take-up

Barriers to take-up Paucity of services Paucity of services Mexican stand-off with providers Mexican stand-off with providers Anti-selection Anti-selection Cost shift Cost shift

Chronic Disease Management Program Funds able to pay benefits for CDMP (rather than as a management expense) Funds able to pay benefits for CDMP (rather than as a management expense) Strict inclusion criteria for inclusion in Risk Equalisation Arrangement Strict inclusion criteria for inclusion in Risk Equalisation Arrangement - Must have disease (or defined risk of disease) - Must have written Plan (actions/goals) - Member must consent to Plan (member must be an active participant) (member must be an active participant) - Provider must monitor compliance - Allied Health providers must be registered (if used)

Not Quite Right (Yet?) Cardiovascular Secondary Risk Reduction Program Program run by a World Health Organisation accredited body where there is an evidence base (randomised control trials) Program run by a World Health Organisation accredited body where there is an evidence base (randomised control trials)

The program was run by providers qualified with PhDs relevant to cardiology (not Allied Health) The program was run by providers qualified with PhDs relevant to cardiology (not Allied Health) We had to significantly redesign the program so that the program was provided by a dietician We had to significantly redesign the program so that the program was provided by a dietician

Quality & Safety The lost aim? The lost aim? The focus is as a funder not as a health system participant The focus is as a funder not as a health system participant Insurers as contributors to wellness and consumer advocates? Insurers as contributors to wellness and consumer advocates?

Partial Solution? Where an evidence base clearly exists, health insurers should be permitted to introduce programs which improve the health of their members……….and not be penalised for doing so, in MER or though non eligibility for risk equalisation

Conclusion Robust regulation framework – good work done Robust regulation framework – good work done Risks: Risks: Future direction prudential standards Future direction prudential standards Cost pressures but premium control Cost pressures but premium control Conformity v innovation Conformity v innovation PHIO site – unintended consequences PHIO site – unintended consequences Sovereign risk Sovereign risk

Conclusion Opportunities Opportunities Improved communication to consumers Improved communication to consumers Contribution to community health Contribution to community health Performance indicators of whole health system efficacy and efficiency Performance indicators of whole health system efficacy and efficiency