Why you won’t gain much from prostheses price reform
The Australian Government has announced it will cut the cost of thousands of medical devices, from pacemakers and lenses to knees and hips. It claims its prostheses price reform will “take pressure off private health insurance premiums”. But looking behind the numbers, it’s hard to get too excited.
Private health insurance is becoming increasingly expensive for consumers, and some of this price pressure is due to Australians paying a lot more for prosthetics than other countries.
But how much would your premiums fall if these savings were passed on?
The Government’s proposed prostheses reforms will reduce the cost of four device categories by between 7.5 per cent and 10 per cent, which will equate to a reduction of $86 million in the first year.
The Government is claiming a total of half a billion dollars in savings because this initial cut has been aggregated over 6 years.
The Health Minister, Sussan Ley, has asked private health insurers to substantially lower premium increases on the back of this action.
But Australians pay over $22 billion a year in private health insurance premiums, which means your bill would only fall by 0.4 per cent if the $86 million reduction was passed on fully by the health funds.
If you hold private health cover, it’s hard to get too excited.
This post was contributed by a representative of Montgomery Investment Management Pty Limited (AFSL No. 354564). The principal purpose of this post is to provide factual information and not provide financial product advice. Additionally, the information provided is not intended to provide any recommendation or opinion about any financial product. Any commentary and statements of opinion however may contain general advice only that is prepared without taking into account your personal objectives, financial circumstances or needs. Because of this, before acting on any of the information provided, you should always consider its appropriateness in light of your personal objectives, financial circumstances and needs and should consider seeking independent advice from a financial advisor if necessary before making any decisions. This post specifically excludes personal advice.
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