Regional private hospitals to feel the brunt of rebate changes

Removing the age-based health insurance rebate for Australians aged 65 and over, will lead more than 200,000 to drop or downgrade their hospital cover, shift about $675 million a year onto public hospitals, and put the viability of some regional private hospitals at risk, according to new analysis by Catholic Health Australia (CHA).

CHA’s analysis, contained in a Senate submission and presented at a hearing today, finds a financial impact on not-for-profit Catholic hospitals of up to $415 million a year.

St Vincent’s Private Hospital Lismore will be one of the hospitals hit hardest by this change. It has cared for the Northern Rivers since 1921, is the largest private rural hospital in New South Wales, and is the only inpatient private hospital serving around 310,000 people.

“When we talk about a policy affecting Australians over 65, we’re talking about the people our hospital serves day in, day out,” said St Vincent’s Private Hospital Lismore CEO, Peter Fahey.

“Seventy-three per cent of our admissions are patients over 65. This accounts for 79 per cent of our bed days. Our modelling says 1,200 to 1,800 patients a year would no longer be cared for at St Vincent’s Lismore. That’s $2.6 to $3.9 million in annual revenue,” he said.

Government modelling predicted 44,313 people would drop their cover entirely, but did not estimate how many would downgrade. CHA’s analysis estimates a further 165,000 will downgrade to cheaper, more limited policies, bringing the total to over 210,000 affected over-65s.

The Government expects the measure to save an average of $750 million a year over the forward estimates. CHA estimates around $675 million a year of this would return as additional cost in public hospitals, with further flow-on costs to aged care as patients wait longer for care in the public system.

CHA also found the policy could raise the cost of maternity cover for younger families as a knock-on effect of older people downgrading from Gold-tier insurance, where maternity sits.

“We support the Government’s objective of better funding aged care,” said Catholic Health Australia Director of Health Policy Dr Katharine Bassett.

“We have done our best to fill the gaps in the analysis, but proper modelling by the government is needed to understand where the impact is concentrated. Knowing where the impact actually falls is what makes it possible to protect the people least able to absorb it and prepare the hospitals that will carry it, and that is worth doing before the change takes effect.”

For further insights, you can watch CHA’s Health Matters podcast.