Health insurance in the US has always been a contentious issue because of its limitations and high cost.
Because of the cost factor it often formed part of a benefit in a salary package with the employer, better able to access to negotiate and manage health insurance discounts.
Aggregation through a multiple of employees gave economic benefit that could not be afforded normally by an employee negotiating as an individual.
Private insurance relies on premiums that relate to what the market will bear, and a range of benefits are assembled under the premium paid.
Profit to the insurance company is the difference between the policy premium paid minus the client’s claims.
Obviously, to reduce the size of a claim means the removal of benefits.
Or as an alternative, to increase the premiums paid.
Given that benefits are funded by premiums relating to what the market will bear i.e. salary or wage level of individuals, there has always been that feeling that if you set up a savings account with the same money levied as an insurance premium, you could pay and manage your own health expenses.
The only worry being that if a major health catastrophe occurred and medical/hospital expenses suddenly loomed very high, would an individual savings account cope with the fluctuation in cash required?
Because that fluctuation factor remains an unknown, most people capitulate and carry some level of catastrophe insurance.
When hospital and medical funds first became popular in Australia, most people could fund their insurance premiums comfortably and even those on moderate range salaries could afford being in the top tables of benefits.
With the passage of time medical/hospital costs increased and insurance premiums began to rise.
To contain this situation, the Australian government established their own health insurance fund and called it Medibank.
The insurance premiums were at the lower end of the scale with a maximum number of benefits.
This model was successful in containing all other insurance premiums and in the process became the largest health insurance fund in Australia.
Recently, steps were taken by government to sell off Medibank to private investors, and fears were expressed by many commentators that Medibank might lose its status as an economical health fund as premiums may be increased and benefits reduced with fund members having to foot the bill at all levels of the operation.
It seems that these fears were justified because Medibank recently moved to increase its fees to the maximum allowable by government and then set out to negotiate with private hospitals to establish contracts that excluded payments for what were termed “preventable events”.
As a result, private hospitals are refusing to sign Medibank’s tough new contract that refuses payment for 165 hospital events, plus will not fund deaths in childbirth, falls in hospital or patient suicide.
Calvary Hospitals in Canberra, Wagga Wagga, Tasmania and South Australia became the test cases for the policy and Calvary has vigorously refused to sign the Medibank contract.
However, Medibank says it plans to roll this out across the country and it was expected to start negotiations with private hospitals in Brisbane immediately.
When a private hospital does not have a contract with a health fund the fund is required to pay a default benefit for hospital services set at 85 per cent of the average fee for each procedure.
While these new restrictions are intended to induce productivity improvements in hospital services, they will have the effect of increasing the overall hospital cost and create an “out of pocket” expense for the patient on top of their hospital account.
Many of the items now not covered by Medibank could be improved by the private hospitals by hiring extra staff to ensure, for example, that bedsore patients are managed properly and that discharged patients receive better levels of pharmaceutical education so that they don’t rebound within 28 days, or higher levels of supervision to prevent falls within the patient’s hospital stay.
Calvary won’t agree to the Medibank new list of “quality and affordability criteria”.
Medibank says it should not have to foot the bill when members treated at Calvary hospitals suffer what it calls highly-preventable adverse events noted above.
Medibank argues such costs should be covered by Calvary in cases where the right treatment could have prevented the need for further care.
But under the current contract, all Medibank Private members are footing the bill for preventable events, putting broad upwards pressure on premiums.
Calvary has hit back, accusing Medibank of trying to dress up an attempt to save money by claiming the changes are about the quality of patient care.
“Many of the so-called quality and safety measures contained in Medibank’s new contract demands appear to be more financially driven than quality focused,” Calvary’s chief executive Mark Doran said.
“… we are concerned that this is its only motivation … while attempting to cloak these changes with another name.”
Doran later said the changes would affect some of the most vulnerable patients typically cared for in Calvary hospitals, including those in the end stages of life.
And he further said many of the things Medibank had described as preventable were in fact common complications.
Australian Medical Association president Professor Brian Owler said the new charges were a “clear indication” Medibank’s strategy was leading to more out of pocket costs for patients.
And he warned these charges would climb higher if other health funds followed Medibank’s example.
Despite the fact that their members face higher costs, Medibank insists “this does not affect our members’ cover”.
“Medibank will always pay for our members’ hospital treatments even if we don’t have a contract with a hospital. The difference is, without a contract a hospital can choose to charge our members additional costs.
i2P is concerned that the new Medibank approach is identical to that of many US health insurance companies.
Other Australian insurers may also follow the Medibank direction, and that it will lead to increasingly higher premiums and the insurance company increasingly controlling health professionals and develop “managed practice” by purchasing hospitals and medical centre practices and allowing rebates to become available to a higher or extended level, only within their totally owned facilities.
Managed practice looks good on paper from a government perspective but is soul destroying to the health professionals forced to subjugate their own professionalism to a bureaucratic and inflexible system.
From a pharmacy perspective it looks like legalised “channellng”.
Managed Care can also include pharmacy ownership, if pharmacy ownership laws can be changed.
Given the powerful political lobby of Medibank, it may join the chorus line of other interests e.g.Woolworths, who want to own pharmacies in their own right and not necessarily having pharmacists on board with majority directors or share ownership.
The current term of the 6CPA contains an investigation into pharmacy location rules. Somewhere there may be a pretext to examine ownership legislation and all the implications that would include if official pharmacy cannot get its act together and provide cheaper clinical alternatives and systems to reduce hospital and medical costs.
The opportunity is there but leadership is lacking.
What is also evident is that some system of covering out of pocket expenses needs to develop.
And it should be developed outside of existing big business influence otherwise it will never succeed.
Why could it not rise up from pharmacy resources that already exist?
An efficient “out of pocket” coverage will also put a brake on major health insurance premiums and still allow health professional freedom of choice.
As i2P has noted on previous occasions, change is now a permanent factor of pharmacy life and constant adaptation to change is required.
This requires inspirational leadership, creativity and innovation as well as a united profession to deliver an appropriate health product.
Health insurance funding needs to emerge for pharmacist clinical services as well.
This is not happening fast enough and leaves pharmacy in a highly vulnerable position to big business predators.