Actions taken by the Commonwealth Government and the National Cabinet to combat the COVID-19 virus will significantly reduce the ability of the health sector to provide services to people with private health insurance. Decisions by the National Cabinet that reduce provision of services to the privately insured include:

1. A wide range of elective surgery and non-essential hospital services will not be undertaken by private hospitals to free resources for COVID patients.
2. Dental services will be reduced following the adoption by the Australian Dental Association of level 3 restrictions on services that dentists can provide.
3. Social distancing and ‘stay at home rules’, especially for older Australians, will result in reductions in the use of many services by physiotherapists, chiropractors and other health related service providers.

Main recommendations:

• The Commonwealth Government and the National Cabinet should direct the Productivity Commission, in consultation with the private health insurance funds, to undertake an urgent review of the likely reduction in private health insurance fund payments. It should then calculate the consequent reduction in premiums needed. A preliminary review should be conducted within two weeks and funds should be directed to adopt the new premiums as of 1 May.
• The Productivity Commission, in conjunction with the APRA, should establish a realtime monitoring system so that the appropriateness of the health insurance premiums can be monitored on a monthly basis. If there are differences between the initial premiums recommended by the Productivity Commission and the actual experience of funds the premiums should be adjusted accordingly. The Commonwealth should undertake to make good any losses to funds resulting from the rapid implementation of the initial premiums