4 th December Private Health Insurance Consultations Department of Health. Via

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1 4 th December 2015 Private Health Insurance Consultations Department of Health Via Re: Private Health Insurance Consultations Dear Private Health Insurance Consultation Section, Thank you for the opportunity for Ltd (LASA) to comment on the Private Health Insurance Consultations LASA is the peak body for service providers of retirement living, home care, and residential aged care. LASA is committed to improved standards, equality and efficiency throughout the industry; helping older Australians to live well. LASA advocates for the health, community and accommodation needs of older Australians, working with government and other stakeholders to advance the interests of all age service providers, and through them, the interests of older Australians. LASA represents private, church, charitable and community care organisations, which gives it the unique ability to provide a comprehensive view on behalf of the aged care industry. The aim is to enable all Australians to have access to, and a choice of, high quality age services. To assist in achieving this, LASA pursues relevant issues with robustness and vigour in order to maintain and enhance aged care services throughout Australia. LASA has a number of offices across Australia allowing it to focus on State and Territory specific considerations and concerns, as well as at a national level. Together LASA presents a strong, unified voice on behalf of the industry to Government and other stakeholders. Older Australians In seeking to address some of the topics that have been raised in the Private Health Insurance (PHI) consultation, LASA highlights some of the existing data available through the Australian Bureau of Statistics (ABS) and the Australian Prudential Regulation Authority (APRA). This information indicates that there are a number of trends with current PHI uptake that should be considered in any proposed changes so as to avoid any unintended consequences: People with increased health risk factors are less likely to have PHI.

2 One of the population groups with the lowest uptake of PHI is by people aged 75 years and over. The highest probability of having only hospital cover (in difference to general treatment cover or combined cover) is in the 65 years and over age group. Single person households are less likely to have PHI than couples. People that have ancillary coverage are more likely to use an ancillary service. This information should be considered alongside population trends and projections so as to provide an informed discussion platform on which to evaluate the existing PHI system and any recommendations of change. Population information, in relation to older Australians, that may be of note in informing this conversation include: The increased prevalence of chronic disease, with the Australian Institute of Health and Welfare (AIHW) estimating that roughly half of all Australians have a chronic disease and that ageing has a strong association with the likelihood of a person having comorbidities i. The life expectancy at birth is increasing, with 2014 figures at 80.3 years for males and 84.4 years for females ii. The proportion of the Australian population aged 65 years and over is increasing and expected to continue to do so. The leading causes of death have shifted with Dementia and Alzheimer s Disease ranked as number 2 in 2013, up from number 5 in Therefore, the number of deaths caused by Dementia and Alzheimer s has increased by 137.4% over a decade iii. In , people aged 65 years and over account for 32.5% of patient encounters with GPs and that this age group has significantly more problems managed at each encounter than any other age group iv. In , 40% of hospitalisations were for people over 65 years of age, which is an average annual increase of 6% each year ( to ), accounting for 48% of patient days. People aged 65 years and over only accounted for 13% of the Australian population at the time this data was collected v. Other factors that may also have an impact on the uptake and/or use of PHI include jurisdictional consideration and access, including: Different arrangements in each State and Territory (e.g. ambulance cover in Tasmania compared to NSW), Access to and use of concession card/s, Remoteness and accessibility to private hospital and ancillary services. Housing options of older Australians are also evolving with more people choosing to remain in their homes for longer periods of time, with the traditional concept of home perhaps also changing to include retirement villages and housing estate etc. There is strong evidence

3 that assisting people to age in place has many benefits to the individual, including maintenance of their independence and health, and avoidance of costs associated with residential aged care. The Commonwealth has recognised this and has sought to reform and expand the provision of services available to people living in the community. These changes are also altering the existing paternalistic service delivery models and moving toward a more consumer led/person centred care approach. These broad policy shifts require significant support from many different avenues, including the ability to access and afford health care. To enable this to occur, access barriers need to be identified and addressed so as to avoid escalation to an acute crisis that could have been managed at an earlier point of care (e.g. presentation to a General Practitioner rather than an emergency department). If there is an increase in cost of PHI, whether this be applied to the general population or based on specific factors (e.g. age), then there would need to be a recognised benefit to the consumer so as to avoid an exodus of people from the PHI system and potentially driving up costs of the public system. However what people think PHI is, and can provide, will impact on their decision to take up PHI, remain covered with PHI or decide not to purchase it, with price as a secondary, but very important factor in informing the decision. As stated in the Department of Health s Consumer Fact Sheet, PHI is defined as providing more health care options and to cover some items which are not subsidised by Medicare vi. Many older people see PHI purely as any other insurance policy, which they make a claim on only when needed (especially hospital cover), rather than as a cover for services (mostly ancillary) that Medicare does not cover. These decisions have been impacted upon in recent times with the introduction of exclusionary products and brings into question the value such products offer. However, the choice of which hospital system to access (private vs public) for frail older people may not be theirs to make. For example, if an older person resides in a residential aged care facility and requires hospital treatment, an ambulance (on most occasions) will transport the person to a public hospital in the first instance. Even if the person does elect to use their private insurance, the difference in daily care and service delivery, especially for the older person, is no different to the person next to them who has elected to be admitted as a public patient. The value of PHI is very much questioned in these circumstances. Transfer to a private hospital may not be considered, nor may be beneficial for the person, especially for those who are cognitively impaired and are already in a confused state of mind, where a change in environment can exacerbate confusion, delirium and other presentations of their condition.

4 Access to the private system is only exacerbated in rural and remote regions and as stated above, electing to use PHI once admitted to the only public hospital available may only impact on out of pocket expenses and not on the care and services delivered. The value of PHI (especially hospital cover) is often questioned in these circumstances. The use of polices that only cover patients for treatment in a public hospital are therefore questionable. Communication and Marketing To assist people to make informed decisions, information needs to be provided in a manner that people can understand. Current information related to PHI can be difficult to locate and difficult to understand due to the heavy use of jargon and a consumer s limited understanding of the health system and its associated costs. Private health insurance information needs to be easily available both when people are considering a policy and also when changes occur to their existing policy. Furthermore, the ability to compare insurers and policies needs to be easier, this may include steps such as: Knowledge of the existence of the Commonwealth Private Health Insurance Ombudsman website. The ability to compare coverage inclusions and exclusions (especially those that encompass exclusionary products) and what this information may mean for the consumer, including the ability to identify health risks for the consumer in order to make informed decisions. The avoidance of industry jargon. Information should be available in plain English (or suitably translated for those of a CALD background) terms to assist people in understanding the material provided. The ability to access and understand information on how the contracting arrangements that the private health insurer may have in place may impact a consumer. LASA recognise that these points have all been identified by the Commonwealth but would suggest that the information available is still difficult to understand and that there is limited awareness of aides available to assist with decision making, information on consumer rights and complaint processes. Policies LASA suggests that better use of epidemiology data to inform future insurance policy needs to be considered. Therefore, looking at people in terms of groups (e.g. age, life style choices) to provide base care options that is informed by the likelihood of a group accessing specific services. This information could also be used to assist the consumer in understanding the population risks associated with their health and behaviours and the probability of utilising a specific service. For example, population A have a B% or an X in Y chance of requiring service C in the next 12 months. This type of information allows people to consider the risk of having to utilise a specific health service and weigh up what they

5 consider unacceptable risk and whether they would like to take steps to try and address this, including having private health insurance that covers specific item/s. LASA is not suggesting the removal of universal coverage, as this may well negatively impact on the older person, however, it may assist people to make a judgement on the value of taking out PHI, and what it can offer, especially if it includes services not covered by Medicare, versus not purchasing PHI and accepting what the public health system can offer. Additional Considerations Consideration should be given to potentially developing information regarding the interaction of different government funded services, such as aged care, and private health insurance. For example, in residential aged care, if a person has been assessed as requiring a certain number of physiotherapy sessions the aged care provider is legislatively required to provide that service. However in circumstances where a person sees the benefits of accessing an additional number of sessions information should be available to identify how this may be obtained and what out of pocket expenses the person is likely to incur. The living arrangements for the older person should not impact on how and when they can or cannot use PHI should they choose, simply because they are unaware of how to access such services. This also impacts on the questions raised in the issues paper in relation to the coverage of selected non-admitted hospital procedures. Many services, for example medical oncology or chemotherapy, are conducted on people who reside in residential aged care. In these instances the cost is borne by the provider whereas if the person resided in their own home it would be borne by themselves. Again, living arrangements should not be the deciding factor, rather insurance policies should keep in line with contemporary practice. LASA supports a review of service delivery items that over time have been moved from the hospital environment to out of hospital. LASA recommends that additional consultation be sought prior to the introduction of any changes relating to private health insurance so as to continue to co-design future policy directions. Older people have as much right to purchase and utilise PHI as any other member of society when and if they chose to purchase it. It must however be cost effective and provide value for money and be able to offer benefits whether the private or public systems are selected. Consideration to the cost of single cover versus family cover should be considered. Single cover not only impacts on younger people, but may have impacts on older people that live alone, whether they have never married, are now separated or widowed. With the proportion of single house holds on the rise, in particular for older women. vii

6 With the growth in population and the proportion of older Australian to the general population growing, LASA considers that this review has not specifically included the needs of the older person. LASA would therefore encourage government to link with peak bodies such as LASA to assist in co-designing a system that ensure the concerns and needs of older Australian are supported. Again, thank you for the opportunity to comment on the Private Health Insurance Consultations Should you have any questions regarding this submission, please do not hesitate to contact Ms Kay Richards, LASA National Policy Manger on Yours sincerely, Patrick Reid Chief Executive Officer i Australian Institute of Health and Welfare 2015, Chronic Diseases, AIHW, viewed 02 December 2015, ii Australian Bureau of Statistics 2015, Deaths, Australia 2014, cat. no , ABS, Canberra. iii Australian Bureau of Statistics 2015, Causes of Death, Australia 2013, cat. no , ABS, Canberra. iv Britt, H, Miller, GC, Henderson, J, Bayram, C, Harrison, C, Valenti, L, Wong, C, Gordon, J, Pollack, AJ, Pan, Y & Charles, J 2014, General Practice Activity in Australia , Sydney University Press, Sydney, NSW. v Australian Institute of Health and Welfare 2015, Australia s Hospitals : at a glance, cat. no. HSE157, AIHW, Canberra. vi Private Health Insurance Consumer Fact Sheet vii Australian Bureau of Statistics 2015, Household and Family Projections, Australia, cat. no , ABS, Canberra.