Review needed on health fund costs

Health funds are reaping massive profits from Australian consumers, with the cost of members’ premiums rising faster than the amount paid in benefits by insurers.

The latest figures from the Australian Prudential Regulation Authority (APRA) reveal that in the past year (to September) premium revenue totalled $23.3 billion, while benefits totalled $19.7 billion.

Health fund net profits after tax rose to $1.43 billion – up by 4.8 per cent.

“These figures might be healthy for health funds’ bottom line but they are not great medicine for private patients who not only face higher premiums but also a five per cent jump in out-of-pocket costs,” said the Consumers Health Forum Chief Executive, Leanne Wells.

“These gap charges, not covered by funds, for medical services in hospital, averaged $299 for hospital episodes and were in addition to any excess or co-payment amounts relating to hospital accommodation allowed for in policies.

“And patients often incur multiple out-of-pocket costs when a medical procedure requires a number of specialists. The provision of a single quote would be ideal but is not consistently done. This adds to the bill shock for consumers. 

“There has been an even more dramatic jump in medical gap costs when doctors bill extra.  These rose to $153.85, up by 19.3 per cent in the 12 months to September, the APRA figures show.”

The figures show that Australians are paying more than ever for health insurance and out-of-pocket expenses to doctors and health professionals, prompting calls for the Government to make good on its promise to follow through on its out-of-pocket expenses project.

“The Health Minister, Greg Hunt, has promised the Government will establish an expert committee to ensure a collaborative approach in determining the best model to make information on out-of-pocket costs charged by doctors more transparent and to help consumers with private health insurance better understand out-of-pocket costs,” said Ms Wells.

 “The Consumers Health Forum is calling for a mechanism to make doctors’ fees much more transparent and open to comparison. We propose some form of independent and authoritative website which lists specialists’ fees and ultimately their performance data so that patients can make an informed assessment.  Modern information technology makes such a service feasible.

“We agree with Mr Hunt who says making doctors’ out-of-pocket costs more transparent will allow consumers to compare doctors’ fees more easily and make an informed choice knowing the expected out-of-pocket costs.”

The Government has pledged funding of $1.1 million to establish a committee that will review best practice models for improved transparency of medical fees and costs.

“Mr Hunt says the change is designed to improve consumers’ understanding of private health insurance and its value to them.  The Consumers Health Form wants to see health insurance made simpler and more certain for consumers to compare different policies easily,” said Ms Wells.

Do you think you pay too much for health insurance that doesn’t deliver? Are your out-of-pocket medical expenses unreasonable? Do you think establishing another committee to review these costs is a waste of time? Would you like to see action instead of more talk?

Related articles:
Health insurance boons identified
Private health reforms snub seniors
Managing the costs of healthcare

Written by Leon Della Bosca

Publisher of YourLifeChoices – Australia's most-trusted and longest-running retirement website. A trusted voice on Australia's retirement landscape, including retirement income and planning, government entitlements, lifestyle and news and information relevant to Australians over 50. Leon has worked in publishing for more than 25 years and is also a travel writer and editor, graphic designer and photographer.

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