The Implementation of Health Insurance Reforms for Private Patients in Public Hospitals

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Acute Health Division
Department of Human Services
A Victorian State Government Department, Australia

The Implementation of
Health Insurance Reforms
for Private Patients in
Public Hospitals

September 1996

Foreword
Executive Summary
Background: Impact of Trends in Private Health Insurance; The Medicare Agreement and Subsidies for Private Patients in Public Hospitals
Commonwealth Framework: Regulatory Arrangements until October 1995; Major Features of the Commonwealth Reforms; Applicable Benefits Arrangements; Hospital Purchaser-Provider Agreements; Default benefits; Timing of New Arrangements for Public and Private Hospitals; Equivalence and Moves to Make the Subsidies More Transparent
Major Issues: Overarching Aims of State Government Policy; Key Issues
Evolution of a New Funding System: First Step in Evolution of New Funding System; Further Steps in Evolution of New Funding System; Mechanism by Which Hospitals Retain Additional Revenue; Competition for Private Patients
Assessment of the Objectives and Goals of Policy Steps: Compliance with the Principles of the National Competition Policy, Especially Competitive Neutrality between the Public and Private Sector; Access to Public Hospitals for Public and Private Patients and Compliance with the Medicare Agreement; Public Hospital Waiting Lists; Maximising Public Hospital Revenue and Hospital Business Unit Revenue; Effect on Membership and Financial Viability of Health Insurance Organisations; Administrative Arrangements; Efficient Operation of the Market for Health Services

Conclusion

Foreword

In May 1995, the Commonwealth Government passed legislation for a package of reforms designed to increase competition within the private health industry and to halt the continuing decline in the number of people covered by private health insurance. The main aims of the Commonwealth private health insurance reforms are to give consumers a wider choice of health insurance products and allow them to purchase health cover that eliminates out-of-pocket costs. This paper discusses options for the Victorian public hospital system for dealing with private patients and health insurance organisations under the new regulatory arrangements.

The Department intends to allow a two-month period for submissions in response to this discussion paper to be made. Written submissions should be submitted by 1 November 1996 and addressed to:

Ms Sharon Willcox
Acute Health Services
Level 17
555 Collins Street
Melbourne Vic 3000

After written submissions are received, the Department will undertake consultation with hospitals, the health insurance industry, health professionals and other interested parties before a final recommendation will be made to the Minister for Health. As part of this process, the Department will conduct workshops to discuss issues raised in this paper and the written submissions. It is expected that these workshops will commence in mid November 1996.

After the Minister has considered this discussion paper and the feedback received during the consultation period, a circular will be sent to public hospitals outlining the funding options that will be available to hospitals and the effect that contracts will have on funding received from the Department.

I welcome any comments, suggestions or queries that you may have about these proposals.

Dr Michael Walsh
Director
Acute Health Services

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Contents

Foreword