Why Private Health Needs a Separation of Church and State

DDU 2024 Panel Discussion - The future of spinal practice

A few weeks ago, I had the privilege of being invited to speak at the Deformity Down Under conference. Sharing the stage with Carmel Monaghan, Maurice Ben-Mayor, and Dr Rob Kuru, our panel discussion centred on what the future of spinal practice would look like in Australia.

It was no surprise to anyone that central to this discussion was the interplay between payers of health care and what, if any, their influence should be on how health care is provided in Australia. What did surprise some was my view, given that I was representing Private Health Insurance, that insurers need to get out of health care provision.

After spending the last decade of my life working in private health insurance, I do not make this statement lightly. Insurers have progressively moved towards a health advisor role with members as reforms have eroded the ability to differentiate on product coverage and price. Fundamentally, insurers now need to be seen as trusted health advisors, as part of how consumers access services and information about health care, if they hope to remain relevant in the modern private health care world. However, stepping into being an actual provider of health care, in my opinion, is a step too far.

To clarify for my health insurance colleagues, I fully support insurers taking more proactive roles in enhancing member health literacy, facilitating access to preventative health care services, and funding programs that help all Australians maintain their health. If anything, I believe more should be done in this space and I am a huge supporter of this transformation. To my mind reforms should consider not only the benefits of broadening the types of services which can be funded by insurers, but also consider mechanisms to further encourage investment by insurers into preventative health care (such as potential changes to how community rating works).

What I am vigorously opposed to is insurers becoming true health care providers and breaching into an organisational framework that creates well-established conflicts of interest between health outcomes for members and the financial performance of the organisation.

This is a structure that our legislation did not conceive of, or fully consider when drafted, and it holds the potential to creates substnatial risks to consumers. With a system that was not designed intentionally for this transformation, opportunities for exploitation and manipulation by insurers are rife and could have dire consequences for consumers and the broader industry.

For example, current mechanisms such as Risk Equalisation could easily be manipulated to shift profitability away from the insurance side of the business, which is price regulated by the government, to the provider side of the organisation. This would effectively allow the group performance of the insurer to improve while negating the effectiveness of price regulation on health insurance products which is a fundamental consumer protection.

After dedicating my professional career in insurance to understanding the complexities of funding, provider behaviour, our legislative and regulatory environment, and the consequences to members/patients when we get this wrong, I cannot see any positive outcome for consumers of health care with insurers becoming providers. If we are serious about the future of health care in Australia, then protecting against this now is paramount to maintaining the quality and value in our current system.

Establishing a separation of payer and provider with the same rigour as modern democracy has established the separation of church and state should be how we consider this conundrum. The separation of church and state came about due to the recognition that either party’s self-interest represented such a complete conflict of interest with the other that, having the ability to engage or influence each other, could be catastrophic to the entire system.

In many ways, we face similar risks as insurers continue to blur the lines between health care payer and "partner" to members, and now becoming health care providers. That insurers understand this enough that they have intentionally differentiated their brands between provider and insurer suggests that they too understand that consumers are not comfortable with this change.

Perhaps this should be a flag to all of us that the separation of payer and provider may be as sacrosacnt as that of the separation of Church and State.