AMA calls for action on insurer market power

THE Australian Medical Association has called for tighter regulation of private health insurers, warning current laws allow insurers to abuse their market power at the expense of patients and doctors.

In a new position statement released today, the AMA said the regulatory framework governing contracts between insurers and medical practitioners has failed to address what it describes as a growing power imbalance.

Federal AMA president Dr Danielle McMullen said the lack of regulation was affecting patient choice, out-of-pocket costs and the quality of care delivered in the private system.

“This lack of regulation impacts patient choice and quality of care, the clinical autonomy of doctors in private practice, private hospital case mix and other professionals involved in the patient’s care,” Dr McMullen said.

She said there were no effective safeguards in existing legislation to prevent major insurers from exerting undue influence over individual doctors.

“The reality is that there is nothing in the Private Health Insurance Act 2007 or the Competition and Consumer Act 2010 to prevent the top five health insurers, which collectively control more than 80 per cent of the Australian private health insurance market, from abusing their market power in contracting with individual medical practitioners,” she said.

Dr McMullen said “no-gap” and “known-gap” contracts were often presented to doctors on a “take-it or leave-it” basis.

“If a doctor does not sign because the insurer’s remuneration is too low or charges just $1 more than the insurer is willing to pay, the insurer will then slash the medical benefits they would pay to patients and blame it on doctors’ fees,” she said.

She said insurer rebates had not kept pace with rising costs, with medical benefits largely unindexed and the $500 known-gap limit unchanged for years.

“This is deceptive and unfair and leads to higher out-of-pocket costs for patients,” Dr McMullen said.

The AMA also raised concerns about confidentiality clauses in insurer contracts, which it said limited transparency and scrutiny, and about restrictions that may pressure doctors to treat patients only at insurer-contracted hospitals.

The association is calling for the creation of an independent Private Health System Authority to oversee private health insurance contracts and develop standardised, transparent terms for no-gap and known-gap arrangements.

“We need an independent body to oversee regulation of private health insurance to ensure both a level playing field in private health and the sustainability of the system, which is hurtling towards an existential crisis,” Dr McMullen said.

“The private health system is incredibly important in Australia’s healthcare system. We need to act to ensure it remains sustainable and fair to everyone involved.”