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• Impact of Means Testing the 30% Rebate
  • Deloitte Report – Economic Impact Assessment of the Proposed Reforms to Private Health Insurance
  • ANOP Report – Impact of Means Testing the Private Health Insurance Rebate
  • How Means Testing Will Affect You And All Australians
  • Impact on Public Hospital Waiting Lists

Impact on Public Hospital Waiting Lists

Based on the ANOP/Newspoll Survey, the Deloitte Report estimates that  impact on public hospitals would be 123,000 additional separations in the public sector in the two years follwoing the change in policy to means test the private health insurance rebate. Furthermore, between 2012 and 2016, Deloitte estimates 846,000 additional separations will occur in the public sector following the proposed policy change.

The Deloitte Report highlights that to the extent that a rise in the cost of private health insurance causes consumers to withdraw or downgrade their cover, this can increase demand for public hospital services and in turn, waiting times for elective surgery procedures. In 2008-09, there were approximately 4.7 million separations in the public hospital system and 2.8 million separations in the private hospital system.

It follows that as consumers reduce or cancel their private health cover, they tend to seek treatment in the public sector. Depending on the number of consumers seeking additional treatment in the public sector and the capacity of the public sector to absorb this additional demand, this may have a range of impacts on access to care in the public sector.

Deloitte suggest that in the short run, if demand increases substantially, hospitals will need to prioritise patients on the basis of need. This may result in longer waiting times for services – particularly elective surgical services. The figure below shows current national averages for waiting times for 14 elective surgery procedures at the 90^th percentile (e.g., 90 per cent of consumers are seen within this time) and the percentage of consumers who wait longer than 360 days (considered to be a ‘long wait’).

Source: AIHW, 2010, Interactive Data cubes Elective Surgery Waiting List times

According to annual Australian Institute for Health and Welfare statistics of waiting list times, approximately 1 in 10 consumers on the waiting list for hip replacements wait more than 360 days, while 1 in 15 consumers on the waiting list for knee replacements wait more than 360 days.

The Deloitte Report modelling estimates indicate that five years following the implementation of the proposed policy change (2016) there are expected to be 310,000 more separations at public hospitals in that year than there otherwise would have been which is a 6 per cent increase in total public sector separations. The additional recurrent cost of servicing these separations in the public sector is $3.8 billion cumulated over five years and $1.4 billion in the fifth year alone

Source: Deloitte analysis of ANOP/Newspoll 2011 Survey results

It is important to note that the 6 per cent increase is expected to occur in addition to the growth in public sector separations which would occur in the absence of the proposed policy  change (approximately 15 per cent growth is expected between 2012 and 2016). This means that if the policy change were implemented, the number of public sector separations in 2016  would be expected to be 20.5 per cent higher than in 2012.

The Deloitte Report applied queuing theory formulae for average waiting list times to Australian Institute of Health and Welfare data on elective surgery waiting lists (and using the current median waiting list time for each surgery), the estimates of base case public sector demand growth and new demand from the private sector, provides an indication of the potential order of magnitude change in average waiting list times for selected procedures. This is shown in the table below procedures. 

Source: AIHW, 2010, op cit, and Deloitte analysis.

As shown in the  Table, depending on the potential increase in capacity of the public sector, public sector elective waiting list times could increase significantly. Increased capacity could be achieved through either increasing the availability of beds, operating theatres, labour (including specialists, nurses, etc) and funding levels by hospital, improvements in productivity, or expanding use of the private sector.

 Because public sector hospitals are currently operating at an 87 per cent occupancy rate, they are arguably currently at capacity. It is likely that some capital infrastructure investment would also be required to meet the increase in public sector surgery demand.