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Private health insurance rebate needs scrutiny.

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24 February 2009

The $3.5 billion private health insurance (PHI) rebate needs further scrutiny in the light of advice from the Federal Treasury that it does not deliver value for money, according to the Australian Healthcare and Hospitals Association (AHHA).

The AHHA is the peak national body representing public hospitals, area health services, community health centres and public aged care providers.

"AHHA has previously called for the PHI rebate to be evaluated to assess whether or not it represents the best use of scarce health resources," Ms Prue Power, Executive Director, said.

"Since the program was introduced by the Howard Government it has never been assessed against its objectives. This is despite the fact that many economists and other health experts have expressed serious concerns that it is an inefficient use of tax-payer funds.

"In fact, the AHHA journal Australian Health Review published a study in 2007 which found that the lifetime health cover policy, which imposes no cost on tax-payers, was far more effective than the 30% rebate in attracting people into private health insurance.

"Other studies support the advice from Treasury that directing these funds towards public health services would achieve much greater health gains than an indirect subsidy through private health insurance.

"In 2003, a Senate Inquiry, chaired by Queensland Senator Jan McLucas, recommended that more research be conducted into the equity and effectiveness of current private health insurance policies. However, the Government's National Health and Hospitals Reform Commission (NHHRC) did not address this issue in its recent interim report despite stating in the report that one of its main themes is "facing inequities".

"With our ageing population and an already stressed health system, we cannot afford to waste valuable health funding. All Australians deserve to know whether their taxes are being used to deliver the best possible outcomes. This can only be achieved if all health programs are rigorously and objectively evaluated.

"I urge the Government and the NHHRC to develop a suitable evaluation methodology to assess the outcomes of the PHI rebate scheme against possible alternative uses of this funding within the health system," Ms Power said.

Contact: Jennifer Doggett 0403 325 980

Private health insurance rebate needs scrutiny