Value of health insurance eroded, Senate committee finds

Transparency, complexity, affordability the key words.

Health insurance value ‘eroded’

Transparency, complexity and affordability seem to be recurring themes in a number of inquiries in recent months.

The trend continued when the Senate Community Affairs References Committee, which has been investigating the value and affordability of private health insurance, handed down its report on Tuesday. It found that premiums had become less affordable while exclusions and policy co-payments had increased, that policies were complex and greater transparency was paramount.

The committee, chaired by Greens Senator Rachel Siewert, said: “The increases in premiums and in the number of exclusions has eroded the value of private health insurance and led some people to drop or downgrade their cover.”

It said that submissions had repeatedly raised concerns about the complexity of private health insurance products and the lack of information provided by insurers.

One particular recommendation – that the practice of paying different rebates for the same treatments in the same state or territory be outlawed – was welcomed by the Australian Dental Association (ADA) which has long been aggrieved at the practice.

If your dentist is not on your health fund’s list of preferred providers, a different rebate applies. For many, this limits your choice of dentist. 

The recommendation was a major win for consumers and dentists, said ADA Federal President Dr Hugo Sachs.

“Policyholders who have resisted pressure from their health fund to give up the continuity and quality of care they receive from their regular independent dentist, have often received rebates that are hundreds of dollars lower than those their health fund pays for the same treatment provided by a fund-contracted dentist,” he said.

“This (practice) is grossly unfair to patients, particularly if they do not have convenient local access to a dentist contracted to their health fund, as is the case for many consumers living outside major metropolitan areas.”

Other recommendations:

  • Federal and State Governments ensure that public hospitals provide equal access to public and private patients with decisions based on clinical need only and not on insurance status.
  • Health funds publish all rebates by policy and item number.
  • Funds provide adequate written notice of changes to policies and eligibility.
  • The Australian Competition and Consumer Commission (ACCC) and the Private Health Insurance Ombudsman develop a new code of conduct for engagement between funds and healthcare providers.
  • The Government to assess whether consumers are best served by the current Gold/Silver/Bronze system or by a four-tier system.
  • The Government to require intermediaries to disclose any commissions received from health funds.

The Consumers Health Forum (CHF) labelled the committee’s recommendations as “ground-breaking” and a great step forward to a more consumer-friendly system.

CHF chief executive Leanne Wells said the forum had argued long and hard for much greater transparency in health insurance and medical fees and looked forward to an early response from the Government.

What’s your experience with private health insurance? Are you covered?



    To make a comment, please register or login
    21st Dec 2017
    The NSW Government is building a new hospital in Frenches Forrest then handing it over to private enterprise. This will be the way of the future. Forget about any promises to provide equal access to public and private patients. Go back to Medicare where we all paid and received a 25% rebate. Private medical insurance have to return the maximum returns to their shareholders. The Commonwealth Government should stop subsidising private financial institutions. After all the taxpayer dosent share in their profits.
    21st Dec 2017
    I've paid in as far back as I can remember. I've now cancelled my policy. I've found that the public health service is more beneficial. Certainly less costly. My policy for the hospital only cost $115.00 monthly. Overnight stay with private cover cost a one-off annual payment $400.00. also, a private room request cost $70.00 per night extra. My treatment in the Qld. public hospitals has been very good.
    22nd Dec 2017
    Likewise, Sen.Cit.88. I cancelled my cover because the gap payment was horrendous and the private surgeon who charged a fortune was inept and negligent. I got far better care as a public patient, at no cost.
    21st Dec 2017
    Health funds have been "value" for the past 30 years? Yeah right.
    Any of us who were/are healthy should have put the monthly contribution into a savings account or shares and left it alone rather than (after all these years) realise they have been sold a lemon. Health cover for the most part was and is just a rip off. How much is your own doctor worth? Really?
    22nd Dec 2017
    A boss advised me, when I was 18, to stay out of health insurance and put the money into buying an investment property instead. He had done that and by the time he needed health insurance it was paid off and the rent receipts comfortably covered all his family's health needs. Smart!
    21st Dec 2017
    The goose that laid the golden egg is just about plucked.

    21st Dec 2017
    All good to talk about. Need to see the action for achieving:
    a. No Gaps for Medical Services (other than the 15% of Medicare std fee) - why have Insurance otherwise? Especially after people accept an Excess!
    b. No annual increases beyond CPI, except in very unusual situations.
    c. Rein in Doctors' fees - otherwise Insurance will never have No Gaps policies.
    d. Standard Product Definitions - comparable by a reliable Govt-controlled website.

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