Senate Inquiry into private health insurance publishes ADA submission

13 October 2017

The ADA’s submission to the Senate Community Affairs Committee Private Health Insurance Inquiry, published on the Inquiry website today, highlights the discriminatory, anti-competitive and at times unethical way some health funds are operating in the “extras” insurance space, with negative consequences for many consumers and dental practitioners.

In its submission, the ADA makes 26 recommendations for reform designed to make “extras” (also known as general treatment) insurance and the operations of private health funds more transparent, more accountable, and fairer for all policy holders and healthcare providers.

ADA President Dr Hugo Sachs urged the Senate Committee to scrutinise the declining value for money extras cover offers consumers, and the real reasons for massive premium increases year after year.

“The health funds are blaming successive premium increases at two to three times the rate of inflation on the rising costs of healthcare,” Dr Sachs said. “But dental fees aren’t to blame for spiraling extras premiums – ABS figures show they’ve only increased in line with the overall CPI over the past five years or so.”

“In the five years to the end of June 2016, the health fund industry as a whole retained a staggering $6.21 billion in extras premiums paid by consumers, instead of providing decent rebates for health services claimed. And it’s not just policy holders who deserve better”, said Dr Sachs, “but all taxpayers, who subsidise the health funds through the private health tax rebate.”

“It’s hard for policy holders to gauge value for money when choosing an extras policy because most health funds don’t list the rebates they give for dental services, and what services are excluded, on their websites or in policy documentation”, he added. “Dentists can’t be sure what, if anything, patients will get back either – but those who have been practicing for many years remark that rebates seem to be declining in real terms”.

Chief amongst the reforms recommended by the ADA is the prohibition of a discriminatory system of “rebate inequality” operated by health funds with “contracted provider” networks.

“Rebate inequality means that patients who want to see their preferred independent dentist, rather than a dentist contracted to their health fund, are penalised for that choice with much lower rebates, even though they pay the same policy premiums” said Dr Sachs.

“The difference between the dollar amounts returned as rebates can amount to hundreds of dollars for more complex services”, he added, “so a patient seeing an independent dentist faces much higher out-of-pocket costs, even if their dentist charges similar or lower fees than contracted dentists charge.”

“Funds now operate contracted provider networks more or less as closed-shops, and they’re not available in rural and remote areas. So rebate inequality is not just anticompetitive for the dental industry, but grossly unfair to patients, who should receive the same rebates if they pay the same premiums”, said Dr Sachs.

The evidence presented in the ADA’s submission is backed up by personal accounts given by over 100 dentists who have also made individual submissions to the Inquiry.

Read the submission.