AIA Australia calls for health reforms to improve mental health outcomes


Damien Mu

AIA Australia and New Zealand chief executive Damien Mu yesterday committed the leading life insurer to supporting a sweeping overhaul of Federal legislation to allow life insurers to fund early intervention and treatment for mental health conditions.

Speaking at the Inspiring Leaders’ Summit in Sydney today,  Mu said: “The current legislative barriers that restrict life insurers from funding medical treatments for mental health condition represent a breakdown of Australia’s health care system to keep up with one of the fastest growing issues we are confronting as a community. Change is long overdue.”

Mu said the current Parliamentary Joint Committee inquiry into early intervention services by life insurers should be a catalyst for the government to accelerate changes to legislation which currently prevents the funding for any treatments offered by Medicare, or where a hospital or general treatment is involved.

“This inquiry is a positive first step and the Government and industry must work together to remove this anomaly from the health system so life insurers are allowed to pay for rehabilitation services and medical treatments for people who suffer from a mental illness,” Mu said.

“There is currently a gap in the health system where people may be unable to receive or afford the support they need, at the time they need it most. We believe life insurers can help to fill this void through funding medical treatments.”

“To achieve this, current legislative restrictions must be removed. The benefits are obvious; the most important one is helping Australians suffering from mental health issues when they need it. Also where appropriate, helping people to return to work earlier, promoting a more sustainable life insurance industry, reducing the fiscal burden on Government – at a time when they are tackling the twin issues of an ageing population and shrinking workforce.”

AIA Australia’s data show that of all mental health claims, depressive episodes are the leading condition, followed by anxiety disorders. AIA has also seen a growing trend of mental health being a more prominent issue for younger people aged 20 to 39 years old, with a third of all claims from this segment being related to mental health.

“AIA Australia processes tens of thousands of claims each month, so we get to see first-hand the consequences these conditions are having on society, with mental health conditions undoubtedly having a great impact on people’s lives.”

“While awareness has certainly increased, as a society we have not yet removed the stigma around mental health issues. There is still a long way to go for people to feel comfortable to speak up and seek help,” Mu said.

Return to work

Mental health doesn’t just impact people’s general health and wellbeing, it can often have a devastating effect on their employment and future ability to return to work. In Australia, people affected by mental health issues are three times more likely to be unemployed, an alarming figure made worse when you factor in that a prolonged absence from work significantly reduces the likelihood of a person ever returning.

If a person is off work for 20 days, they have a 70% chance of returning to work. If they are off work for 45 days, the chance of returning reduces to 50%. After 70 days, the chance of returning to work is just 35%.

“The longer someone is unassisted or unable to overcome their illness, the worse their condition gets and the more unlikely it is that they will ever return to work. Those first few months have such an important role to play in determining the long-term severity of a condition and the impact it will have on a person’s life.”

“As a result, we need to rethink the way support is made available. Under current arrangements a person with a mental health condition must establish they are permanently unable to work before they can access recovery funds through a life insurance policy. We think that should change.”

“Lump sum policies play a hugely important role in our society, but mental health is more complex and deserves additional thought to the best methods in providing support, especially in encouraging a return to work,” Mu said.

Removal of legislative barriers needed

For example, a person impacted by a mental health condition can receive ten medical appointments through Medicare. Under the proposed legislative changes, life insurers would be able provide financial support to cover the costs of any additional appointments once the initial allocation was exhausted, if the person required.

“The changes we are proposing will add an additional layer of support to Australia’s health system and would work in conjunction with the existing services, not in direct competition.”

“In most cases, people who make a claim for a continuous disability policy have already interacted with other schemes such as the support offered by private health insurers, workers compensation or Medicare. However, in some instance more support is required, and this is the gap we are trying to fill.”

Mental health issues have grown to represent the third largest area of claims at AIA Australia, only sitting behind cancer and musculoskeletal conditions as the leading claim causes. More than $153 million was paid out for mental health claims in 2017, with this amount rising by approximately $25 million each year since 2015.

According to an Australian Bureau of Statistics (ABS) study, 45% of Australians between the ages of 16-85 years will experience a mental health condition in their lifetime, while they also estimate that untreated mental health conditions cost Australian workplaces approximately $10.9 billion per year. In addition, the ABS also indicated that almost 3,000 lives were lost nationwide through suicide in 2016, more than twice the national road toll.

If legislative changes were made, the Government would enjoy fewer demands on its budget coffers via lower payments from the Disability Support Pension (DSP) and the National Insurance Disability Scheme (NDIS). A Productivity Commission report estimated that the cost of a fully functioning NDIS will be about $22 billion in the first year of full operation, while the DSP costs an estimated $17 billion a year. The cost savings are significant.

“Under the current legislative umbrella, for example, the costs of nursing care and some occupational rehabilitation expenses can be paid. But certain medical costs are excluded, such as mental health claimants requiring psychiatric or psychological treatment.”

“It’s a flaw in the system that needs to be addressed. It will require changes to the Life Insurance Act, the Health Insurance Act, and the Superannuation Industry (Supervision) Regulations, none of which should pose an insurmountable hurdle – especially when the benefits are so tangible. We need to support and assist Australians in a time of need,” Mu said.

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