Private health insurance in primary care: overview of issues

While the Government’s proposed patient co-payment for GP services has focused debate on whether some kind of ‘price signal’ for GP services is needed, private health insurers have been exploring options to provide their members with free or expedited access to GPs. Under current legislation, health insurers cannot provide insurance for which a Medicare benefit is payable. Despite these legislative restrictions, Medibank Private and other health insurers have been trialling different approaches to improve access to GP services for their members.

In Queensland, Medibank Private has been running the GP Access Program in selected clinics which is aimed at improving members’ access to primary care services. According to their submission to a Senate inquiry, the trial is built around three key elements:

  • Guaranteed same-day appointments for Medibank Private members, if they call before 10am
  • Fee-free (bulk billed) consultations for members who show their Medibank card
  • After-hours GP home-visits for members in metro areas within three hours.

According to Medibank Private, the GP Access Program should ‘improve individual health and may reduce the need for hospital admissions and associated costs, thus easing pressure on premiums and helping to maintain private health insurance affordability’. Medibank Private is also trialling another GP program for members with complex health needs.

Medibank Private is not directly reimbursing doctors for their service but contributing a management and administrative fee towards the cost of the program, utilising its management funds rather than funds earmarked for health insurance. As such, the Department of Health does not regard this trial to be in breach of legislation, according to their submission to the same Senate inquiry.

Other examples of insurers moving into the primary care space include HCF providing an after-hours home GP service for their members and Bupa members receiving discounts in Healthscope’s national network of medical centres, skin clinics and pathology services.

The Government has been generally supportive of a bigger role for private health insurance in primary care, with former Health Minister Peter Dutton publicly indicating support for such moves.

Currently, some patients can incur high out of pocket costs when a doctor doesn’t bulk bill. In particular, specialist fees have been recently highlighted as an area where patients can face a significant gap—the difference between the rebate and the fee charged. Former Howard Government health advisor Terry Barnes proposed allowing health insurers to cover this gap for GP services, in a submission to the Commission of Audit.

Why aren’t insurers currently allowed to help cover these out of pocket costs?

The origins of Medicare may help explain. The scheme was meant to provide universal coverage for nearly all essential medical services (although some say this should have included dentistry), while public hospitals would provide free hospital treatment. The role of private health insurance would supplement Medicare, providing complementary cover for those who wanted a choice of doctor in private facilities and coverage for ancillary services such as dentistry and physiotherapy.

But far from a diminished role, private health insurance has retained a strong presence in Australia's health care system, supported by the public and a suite of government policies such as the Medicare Levy Surcharge, Lifetime Health Cover and the private health insurance rebate.

In 2007, legislation passed allowing health insurers to offer products such as Chronic Disease Management programs that would keep their members healthy for longer. Under Broader Health Cover, insurers can offer insurance for services that keep members out of hospital and prevent development of chronic conditions (such as Quit Smoking programs). Support from health insurers for such programs has been steadily growing, after a slow start. The GP Access Program could be regarded as consistent with these types of preventive initiatives.

But a number of arguments have been raised against allowing private health insurers to cover primary care services directly.

Firstly, those with private insurance may enjoy privileged access to services, raising issues around equity and over-servicing. Some argue that publicly insured patients could find themselves at the end of the queue as doctors prioritise more valuable private patients. Others point out that private patients may utilise even more services if these services cost them nothing.

There are also potential inflationary effects. If private insurance such as gap insurance was allowed, doctors could feel freer to increase fees knowing health insurers would have to cover the gap or lose customers. Some commentators blame gap insurance for the significant rise in specialist fees in private hospitals over recent years.

Finally, many in the medical profession harbour concerns that allowing private health insurers to cover primary care services would erode their clinical autonomy. AMA President Associate Professor Brian Owler has raised concerns that moves by health insurers into primary care could interfere with the doctor patient relationship.

If the government is keen to see a bigger role for private health insurance in primary care, it may face a number of challenges in progressing this. Balancing this approach with other important policy objectives such as a sustainable health system, better management of chronic health conditions, principles of equity and universality, as well as quality care and innovation, could prove difficult.


Flagpost is a blog on current issues of interest to members of the Australian Parliament

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