Asked whether the government’s review into multinational tax avoidance would look into medical device suppliers,Treasurer Jim Chalmers said Labor’s reforms would “address tax loopholes exploited by multinationals and improve tax transparency”.
“It’s important that we get this right,which is why Treasury is consulting widely about proposed changes to our multinational tax system,” he said.
Former Health Minister Greg Hunt in March came to a deal with the Medical Technology Association of Australia,which represents the medical device suppliers,to ensure that private patients will always pay between seven and 20 per cent more than the public price for medical devices.
This partially reversed a prior commitment to begin lowering the gap between the cost of medical devices in public and private hospitals. It also came on top of the already inflated public prices that Australians pay for medical devices,with some implants selling at up to three times the price here than in Britain or New Zealand.
According to correspondence seen by this masthead,the nation’s private health insurers have made a guarantee to the government that every single dollar saved from reversing Hunt’s deal would go back into Australians’ pockets through lower premiums.
Reversing the Hunt deal would save private health customers $400 million over four years and the budget $100 million,according to Private Healthcare Australia,which would be equivalent to 0.5 per cent of average health insurance premiums.
Medical Technology Association of Australia chief executive Ian Burgess said insurers were “making blatantly false representations to the media about the impact of Prostheses List benefits on premiums,which doctors,hospitals and consumer advocates can tell you is not the main contributing factor”.
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He also accused private health insurers of “continuing to spend more on themselves through management fees to the sum of $2.6 billion”.
“MTAA and its members believe in all companies paying their fair share of tax and being fully compliant with taxation law in Australia,” he said.
“Actions by the corporate insurance industry to hijack the Government’s review into multinational tax is yet another example of insurers prioritising profits before people.”
The federal government sets the prices for more than 11,000 types of medical devices for privately insured Australians through the Prostheses List.
Peter Breadon,director of the health and aged care program Director at the Grattan Institute,said the deal between Hunt and the MTAA,which represents the medical device suppliers,was “hard to justify”.
He said there was no reason why the prices for medical devices at public and private hospitals should be so different.
“I think that the devices industry has too much input into device pricing and the way it’s done,and this could be another example of that,” he said.
“I don’t think there’s a good reason to do it this way[fixed pricing through the Prostheses List]. And it explains why we pay such high prices here.”
In a statement,Health Minister Mark Butler said he was “engaging with all stakeholders to get a clear understanding of what the former minister agreed to regarding the Prostheses List”.
“The government’s priority is that people can access affordable medicines,treatments and medical devices and that the Australian taxpayer gets value for money,both in the public system and through our support for private health insurance,” he said.
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