Grattan Institute wrong on devices

The Grattan Institute’s attempt to paint the medical devices industry as the solution to the woes confronting private health insurance fails to take into account the ongoing reform process started in 2017.

The medical devices industry has been the sole contributor to reducing the pressure on private health insurance premiums, through the Agreement signed with the Commonwealth in 2017.

This means that, for example, in February 2020, hip replacements will have their 3rd price cut in 4 years.

The Agreement will save private health insurers $1.1 billion in payments for medical devices over the next four years and helped deliver the lowest private health premium increase in 18 years in December 2018.

The benefit paid per device has declined by 1% per annum since 2013, with any increase in expenditure on devices due entirely to an increase in demand.

According to recent APRA data, compared with the March 2018 quarter, March 2019 quarter statistics show that the average benefit paid for all prostheses has gone down 9%.

The Prostheses List is a key part of the value proposition of private health insurance and ensures that surgeons can choose the best available device for privately insured patients without the option being restricted by health funds.

The Prostheses List protects consumers from the adverse consequences of financial decision making by insurers – bundling payments, as proposed by the Grattan Institute, incentivises the lowest cost option and is not in the best interests of patients.

It is disingenuous to compare device prices in Australia with those overseas, as prices are influenced by differences in:

  • Healthcare systems
  • Purchasing arrangements and markets
  • Volumes of devices
  • Technical manufacturer support required
  • Cost of supply
  • Regulatory costs 

Ian Burgess, Chief Executive Officer of the Medical Technology Association of Australia said:

“Costs for medical devices have fallen in every quarter since Agreement with the Federal Government signed in 2017.

“The medical devices industry has been the sole contributor to reducing the pressure on premiums, with another round of price reductions to come in January 2020.

“The Prostheses List is a key driver of choice for privately insured patients, enabling surgeons to choose the best possible device for each individual patient.

“The Prostheses List ensures that patient outcomes, rather than insurer profits, are at the centre of patient care. Bundling payments, as proposed by the Grattan Institute, simply serves to incentivise the lowest cost option and restrict access.

“To make comparisons with international prices is like comparing apples with oranges, as the price of devices can vary due to a range of factors, including differences in healthcare systems, purchasing arrangements, geography and other economic factors.

“The medical technology industry believes access to a full range of medical technology is the most valuable component of a private health insurance policy and we’re committed to doing what we do best – assisting patients to lead healthier and more productive lives.”