Health insurers should be wary

Is private health insurance a rort? YourLifeChoices members seem to think so, with the huge majority saying they pay too much for cover and get very little in return.

One positive that could be drawn is that they’re lucky they’ve not had to use it, but 75 per cent of those who do, say the insurance is not even enough to cover medical gap fees.

So, they’re paying through the nose for insurance then still having to pay too much for medical services when they need them.

Does this sound like a rort to you? Seems like the industry needs to be strapped into a chair with a harsh light shone on its face. And yet, it’s one of the industries successive governments seem at pains to protect.

When the Hawke government introduced Medicare in 1984, 54 per cent of the population had private health insurance, but the universal healthcare system meant many fund holders turned to the publicly funded system, so by 1997 that number was down to 33 per cent.

John Howard then threw private health insurers a lifeline in 1997, with the Medicare levy surcharge for everyone earning over $100,000, and again in 1999, with the 30 per cent private health insurance rebate.

And then the Howard government essentially blackmailed the public into taking out private health cover, with the introduction of ‘Life Time Health Cover’ in July 2000. This penalised people two per cent of the premium for every year over 30 they didn’t have private health cover. Unsurprisingly, the percentage of those in the private health system rose to 46 per cent, which is where it has remained since.

The Friday Flash Poll: What’s your take on private health cover? revealed that 85 per cent of the 1121 respondents have private health insurance, with 81 per cent saying they pay too much for cover – only six per cent saying they pay what they think is fair.

Health insurance premium rises have outstripped CPI for the last five years. Since 2013, the average yearly premium hike was just over five per cent. Since 2013, annual CPI increases have averaged just under two per cent.

Should this be investigated?

Early last year, the Labor party said it would limit private health insurance premium increases to two per cent, much more in line with inflation increases. But CEOs of this ‘protected’ industry screamed, with some saying such a limit was “absurd”.

Mark Fitzgibbon, chief executive of health fund nib, expressed concern that “a future government would seek to set prices in any highly competitive market.”

This is the same industry that has been saved by governments past and essentially relies on future governments to encourage the public to have private health cover.

“[It] may be politically popular but it’s an affront to how the free market operates. What next? Food, clothing, car insurance, school fees and petrol?” said Mr Fitzgibbon.

If the market were truly ‘free’ – free of government ‘incentives’, would you keep your private health insurance?

Only 15 per cent of the poll respondents, who, incidentally, are the biggest cohort of fund holders, think they get good value for what they pay, while a whopping 74 per cent believe they don’t. Of those surveyed, 57 per cent say they completely understand their insurance cover, with 43 per cent saying they don’t.

Three per cent of the poll respondents pay between $50 and $99 per month, 10 per cent pay between $100 and $149, 17 per cent pay between $150 and $199 and 55 per pay $200 or more each month. Around 33 per cent say it’s their biggest monthly expense, with 13 per cent saying it’s second on the list.

If government-mandated penalties were removed, many people would dump private health cover, especially those who say it does not deliver value for money.

And with premiums increasing at double the rate of inflation and wages growth, we can expect calls for a royal commission or at least a massive overhaul.

“There needs to be a royal commission into these health funds, I believe they would come out just as corrupt as the banks and financial institutions. They constantly, over the years, increase their fees way above the inflation rate and reduce the cover unless you pay more,” wrote YourLifeChoices member 1984.

“Health Insurance is not ‘insurance’, it is merely a method of reducing costs to the individual. The main reason for increasing cost of premiums is the avaricious medical providers who charge extortionate fees and costs. A royal commission should be held into medical provider fees. Although I believe they should be ‘nationalised’, wrote Huskie.

It’s the government who has saved the private health industry and it’s the government that needs to take action to make the system fairer. Not for the industry but for the people it’s supposed to protect. Currently, it seems the system is lopsided. If our member comments are any indication, the private health industry should start watching its back.

Would you dump your policy if the government-mandated penalties were dropped? Do you think health insurance is a rort?

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