Impact on public hospitals if private health insurance rates in Victoria declined

Abstract

The additional cost of treating acute care type Victorian private patients as public patients in Victorian public hospitals based on the current public sector payment model and rates was calculated, as was the loss of health fund income to public hospitals. If all private cases became public the net recurrent cost would be $1.05 billion assuming all patients were still treated. If private health insurance (PHI) uptake had declined to 23.3% as was projected without Lifetime Health Cover and the 30% rebate, the additional operating cost and income loss would be $385 million. This compares to the Victorian cost of the 30% rebate for acute hospital cases of $383 million. This takes no account of capital costs and possible public sector access problems. The analysis suggests that 31 extra operating theatres would be needed in the public sector (had the transfer of surgical patients from the public sector to the private sector not occurred). This analysis suggests that without the PHI rebate the current stresses on Victorian public hospitals would be increased, not decreased.