Health Insurance Deal Under Fire
Sydney Morning Herald
Monday March 23, 1992
CANBERRA: The Federal Government is under pressure from sections of the health industry to veto a landmark deal between Medicare Private and the Public Sector Union (PSU) for the provision of health insurance to union members and their families at substantial discounts.
The Australian Private Hospitals Association claims the deal breaches both the spirit and the letter of Federal legislation preventing health funds discriminating between members.
The claim is made in a letter from the association's executive director, Dr Greg Herring, to the Minister for Health, Mr Howe.
Dated March 19, the letter follows the announcement by the 107,000-member PSU that it had entered into an agreement with Medicare Private to provide union members and their families with tailored health and hospital insurance plans, at a discount of about $15 a week on normal family premiums.
The PSU is also negotiating with other insurers on similar packages for personal, motor vehicle and house insurance, as part of an ambitious strategy to broaden its range of services to members.
In his letter, Dr Herring said the deal breached the community rating principle, under which private health funds were prevented from discriminating between members.
The principle is designed to stop funds tightly targeting their membership to minimise health insurance costs. It makes it illegal for the funds to turn away the sick, the elderly and those with large families, who compromise the biggest users of health services.
"The arrangement between Medibank Private and the PSU ignores the community rating principle," Dr Herring said. "An already privileged group of people are offered private health insurance at a rate lower than the general membership of the fund. This arrangement is not available to other fund members."
Dr Herring said the deal should be scrapped because it was "dangerous" and signalled an end to the community rating principle.
"There is likely to be an all-out recruiting war between insurers trying to do deals with large employers/unions at cheap prices. Those who are elderly, selfemployed, or in small organisations will be forced to pay higher and higher premiums."
The trend would lead to a US-style health insurance system, with employers bearing the cost of most premiums.
Dr Herring said his association was also concerned about the working of the scheme. The PSU has been able to negotiate lower premiums by working with Medicare Private on insurance plans targeted directly at its largely white-collar membership.
One family plan prevents members seeking private hospital treatment for such things as hip and joint replacement, which are not regarded as common for working-age groups.
Dr Herring said this arrangement marked the beginning of discrimination against certain types of patients and certain types of hospitals, and would also put further pressure on the labouring public hospital system.
Mr Howe could not be contacted yesterday.
But the general secretary of the PSU, Mr Peter Robson, said last night he was confident the deal would stand up to legal scrutiny.
"Medicare Private has considered this issue very closely and has assured us the scheme we have introduced is within the law and will not mean the end of community rating."
© 1992 Sydney Morning Herald
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