'Corrupt' system drives Aust health costs

Competing arguments about why Australians are paying more for private health insurance are set to play out in a parliamentary hearing.

Australians are paying the highest prices in the world for pacemakers and other medical devices because of "corrupting" forces driving up the cost of private health insurance, an industry insider claims.

Rules around how much private patients must pay for medical devices have been likened to a "criminal cartel", described as a government-sponsored system for artificially fixing prices.

The claims have been made from within the medical device industry, in a submission by Applied Medical to a Senate inquiry looking into rules that make medical devices like pacemakers more expensive in the private system than the public system.

The company's chief executive Said Hilal will front the inquiry on Thursday to give evidence that the system is wasting at least half a billion dollars each year.

"The system is actually rigged and flawed and invites this corrupting factor," Mr Hilal told AAP on Tuesday.

The California-based company which makes and sells tools for keyhole surgery says there's no country in the world with a system like Australia's, insisting device companies are incentivised to charge exorbitant prices and private hospitals are encouraged to share the spoils by accepting or seeking "hidden rebates" in return.

Meanwhile, the bill for the over-priced devices is covered by private health insurers, and in turn, consumers through higher premiums, Applied claims.

The Medical Technology Association of Australia, due to front the inquiry on Wednesday, says the claims are simply wrong and is advocating for a price disclosure model to increase transparency around pricing.

The industry argues prices are higher for private hospitals because public hospitals buy much larger volumes and don't provide the same variety of devices to patients, meaning private hospitals can't leverage the economies of scale public hospitals can.

The MTAA argues benefits paid by private health insurers for medical devices are only 14 per cent of the total, while hospital costs represent 70 per cent.

"A review of these costs is likely to generate more substantial savings," it said in its submission to the committee.

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