Making changes now for a healthier future Australia

The COVID-19 pandemic highlighted just how interconnected our health, our environment and our economy really are.  So as our country moves to rebuild and settle into a COVID normal including customers getting back to hospitals for procedures that have been delayed, measuring what matters offers the Albanese Government an opportunity to refocus on what Australians want for our lives and for future generations.

We agree this budget, which includes Australia’s first wellness budget on things like quality of life and our health, will need a steady approach to fundamentals and strategic spending to help manage inflationary pressures and steer the rebuilding of our economy. This can and should be accompanied by real, sustainable wellness measures to set our nation up for a healthy future. A future where investments in prevention have curbed the rising rates of chronic disease highlighted in the most recent Australian Census and our aging population is staying healthier for longer.

Australian household budgets are under growing pressure, and our public hospitals remain overburdened. We know that a strong private health system is a vital part of taking pressure off the public system and keeping it sustainable, so those who need it can access public care promptly Our private health sector is ripe for the consumer centred reforms that will help get us there, while making it more affordable, accessible and relevant.  We think there are two priority areas to focus on in this space – making it easier to fund preventative treatment, lifestyle and wellness products and broader availability of out of hospital care.

For example, allowing insurers to fund more care in community settings rather than in hospital to help free up hospital beds and reduce the incentives to medicalise treatment. Hospitals will always be the backbone of our medical system but reducing red tape would allow more preventative and out of hospital care to reflect modern care delivery and the increase in chronic illness.

Alternative models of care help reduce unnecessary costs and drive affordability. Currently, doing rehab at home instead of in hospital is about one third of the average cost of inpatient services. On average, in-hospital rehab costs about $9000, while in contrast, it costs about $3000 for rehab at home. For some patients it means they can receive the care they need in the comfort of their own home, while keeping a hospital bed free for someone else that needs it.

And although we know that increased wellbeing has physical benefits including lower cardiovascular disease, stroke, and sleep issues, there are restrictions on payment of benefits for certain lifestyle and wellness products under current laws.

Such policies also have intergenerational consequences. The participation of young and healthy customers in private insurance is key to the sustainability of the industry. But increasing costs and regulatory restrictions have made health insurance less relevant and less affordable for younger Australians.

Expanding the ability of health insurers to fund certain wellness and lifestyle products like gym memberships, fitness wearables which are relevant to younger people would help encourage price sensitive millennials to spend money on things that matter to them. It also empowers to help personalise their preventative health.

Encouraging young people to invest in their own health and wellbeing will help address disease burdens as people age, which will have a material impact on future health care costs. Obesity is one area that is having an increasingly significant impact on health care costs. We’re seeing this with surgeries for hip and knee replacements and major procedures in obesity being among Bupa’s top 10 most expensive claim items. Current cost of hip and knee replacements to the Australian healthcare system are $5.32 billion, of which $3.54 billion is attributable to the private sector. Total knee replacement is projected to rise by 276 per cent and total hip replacements by 208 per cent by 2030.

Increasing the attractiveness and perceived value of private health insurance for younger Australians means that affordability is increased for all members with a broader market from which to spread the risk and absorb the price associated with higher cost medical procedures for our ageing population.

As well as supporting the health and wellbeing of insured people, private health insurance also benefits those without cover through the reduction of public hospital waiting lists and minimising demand pressures on the public health system.

McKinsey research shows that even a 10 per cent drop in private health membership would see 1.5 million additional people becoming fully dependent on the public hospital system. That would increase waiting lists by 90 per cent and taxpayers would need to pay for an extra 3,600 hospital beds - equivalent to Australia’s four largest hospitals.

Having more younger people with private health cover to balance our mixed system and ease the pressure on public health and removing barriers to make private health insurance more affordable, simple and relevant to all Australians will translate to a healthier nation and healthcare system.