Is your private health insurance policy ‘junk’?

AMA calls on the Government for healthcare policies to contain a minimum level of cover.

The Australian Medical Association (AMA) is calling on the Federal Government to ensure all healthcare policies contain a minimum level of cover and to make ‘junk’ policies illegal.

According to Mick Bellairs from Consumer Action Law, “junk insurance is industry jargon for ‘consumer credit insurance’, which takes the form of add-on insurance, gap insurance and extended car warranties. It is sold in with car loans, credit cards and personal loans. Often consumers don’t even know they have it, or couldn’t even make a claim even if they wanted to, as the insurance was mis-sold.”

AMA president Michael Gannon has run out of patience with private health insurers and said there is a proliferation of junk policies which are worth nothing more than the paper they're written on purely designed so people could avoid the tax penalty.

"Private medicine is under siege and, in many ways, that's because, very quickly, the community is losing faith with their private health insurance, which underpins most visits to private hospitals," said Mr Gannon.

"And we seem to be seeing an orchestrated campaign by the insurers — an industry which is increasingly a for-profit industry — to deflect the blame from the real problems.

"And the real problems are that patients are getting sick and tired of finding out when they're sick that their insurance isn't good enough."

Mr Gannon and the AMA are pushing for a streamlining of thousands of policies into simple gold, silver and bronze categories so people know what they are paying for. 

"There is a bewildering number of policies, and it worries us that this might be quite deliberate," he said.

Private Healthcare Australia chief executive Rachel David disputes this suggestion. "the reason that there has been an increase in the number of products where some treatment areas are excluded is because consumers have been offering more bespoke products or products that are tailored to their life stage," said Dr David.

Are you concerned that your policy may not cover you for the risks of your age and stage? Do you believe a simplified system as suggested by the AMA would make health insurance policies easier to understand? Do we really need more government regulation? 

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    COMMENTS

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    CoogeeGuy
    22nd Aug 2017
    10:06am
    I agree with the AMA, with Health Insurance, across all agencies, to be standardised into the three categories of 'Gold', 'Silver' and 'Bronze'. Under the current system, Insurance Companies set out their products in a way the customer finds it hard to compare and/or choose what cover best suits them. The insurance companies won't like the AMA's decision as they will have to be more competitive and lower their premiums as to attract customers. We all know any insurance is about greed, and to squeeze the maximum amount out of their customers. In a nutshell, we all know we are being ripped off, especially when it comes to paying for 'extras' cover. Due to the increasing costs I am now reviewing the need for extras cover as I only use it for a yearly dental checkup, and optical. But I am controlled by fear that when I do drop it, I may then need it. I think we all relate to that feeling and which the insurance companies feed off.
    Ella
    22nd Aug 2017
    11:32am
    We review our health insurance yearly and made the decision to drop extras when we realized all we used it for despite the copious amounts of money it cost us was dental and optical. It has saved us heaps and now we just budget for dental checkups and glasses. Optometry visits were always free. We changed our hospital cover to a not for profit insurance recommended by AMA and saved about $210 fortnightly without extras and items we didn't need.
    GeorgeM
    22nd Aug 2017
    8:45pm
    It's a good idea to create Standard Products which can be compared.

    The Private Health Insurance system in Australia is a fraud on the people, as the Govt forces it on people (with penalties), approves large increases in premiums every year, and yet forces Patients to bear the Risk of Gaps and High Doctors fees. Insurance companies need to bear these Risks of Gaps (all except 15% of Medicare Scheduled Fees) and High Doctors Fees, including for costs of Diagnostic Tests and Pharmaceuticals. What we have is not Insurance, simply a scheme to refund part of the costs. Insurance companies are getting away with a complete con on people without taking on these Risks, and making great profits.

    The Govt needs to change Laws as needed, and allow / persuade / force Insurance companies to cover all Risks for Gap Fees and all Medical Costs (all except 15% of Medicare Scheduled Fees), and then create a competitive market by ensuring Standard Products with full coverage (without exclusions) are offered.
    Ted Wards
    22nd Aug 2017
    10:09am
    I had gap insurance on my car load a few years ago and it paid out big time. My car was written off in that horrible hail storm of nov 2014 in Brisbane. My insurance paid out the car, the gap cover paid the rest of my loan and I got a $3000 payment for the inconvenience of not having a car. I did go through a very reputable broker though. It really does come down to researching the feedback about the insurance and how they are dealing with claims.
    Ella
    22nd Aug 2017
    11:38am
    We fell for extended warranty insurance on our 4WD Pajero which cost a fair bit and the 2 times we've put a claim in (major electronics fault and aircon failing ) they knocked uus back. Never again will we waste the money.
    52-KID
    22nd Aug 2017
    8:48pm
    We also had extended warranty on a car loan, which supposedly covered sickness and accident. That was a joke - from memory you had to be off work for 6 weeks before you could claim, and even if you got that far the amount they paid was an absolute pittance. It wasn't worth the paper it was written on.
    MICK
    22nd Aug 2017
    10:33am
    We always worried about never having private health insurance but of late I can see we made the right decision. This has saved us tens of thousands of dollars over the decades. Of course if something goes wrong we will need to fund our own medical help, which could cost a fair bit but the gap is a rort which always leave even the highest insured with a high bill after their treatment is done. It has always been a scam and it is good that the media has finally exposed this for what it is.
    Anonymous
    22nd Aug 2017
    3:43pm
    Yes MICK, it can be classed as a scam if you don't need elective surgery. Emergency hospitalisation is covered by the public purse and a patient can rest assured that there will be no gap to pay on discharge. If a non-life threatening problem arises, regardless of the pain involved, one could find oneself at the end of a long queue putting up with the pain until a public space is made available. We choose to waste our money on health insurance just in case. Remember MICK, insurance of any sort is when you are betting an insurance company that you are going to die/have an accident/get sick/ have your house fall down and they will accept the bet and your money. Those of us who insure have peace of mind.
    invisible sock
    22nd Aug 2017
    10:41am
    This is a very complicated area & trying to compare funds can be a nightmare.
    For instance, do your loyalty benefits transfer across if you change funds?
    Also, most funds only have a limited number of tiers, with a set list of extras, which are non-negotiable.
    Another problem is lifetime limits, which can be very stingy for some essential services.
    The fund I'm in has a LL for orthodontics of $2100.
    pedro the swift
    22nd Aug 2017
    10:56am
    Note the Term: Private!. It means a business which is in it for the profit, nothing else.
    To say they "provide" a service is laughable when their ONLY motive is to make a profit for the shareholders.They will only give you the minimum required to get you signed up.
    Note that is the same for ALL private businesses be it telcos, power, transport etc.
    Every organization that started out being gov. owned has now been "privatised" by various govs. and all costs to consumers have risen. There is no real competition here at all(see banks). And whats worse many are owned by foreign companies who probably pay very low or no taxes to ATO.
    MjP
    22nd Aug 2017
    11:49am
    Yes we need more regulation. When private for profit companies get involved the only thing they are interested in is making as much profit as they can, they don't know what the word service means.
    MjP
    22nd Aug 2017
    11:49am
    Yes we need more regulation. When private for profit companies get involved the only thing they are interested in is making as much profit as they can, they don't know what the word service means.
    cookie47
    22nd Aug 2017
    1:11pm
    Spot on MjP, I've always said that essentiall services
    (gas, power and water) should be run by the government to provide affordable services to All.
    Yes they need to be run efficiently which is often the downside. Once the private sector is involved profits are the only criteria. We have been fooled that prices will drop when in private hands. I write this having two colleagues that worked for the old Sec (Vic)
    Old Geezer
    22nd Aug 2017
    12:26pm
    It is now cheaper to buy a junk medical insurance policy than to pay the excess Medicare levy for high income earners. That's why these junk policies now exist.

    So people are not buying them for the health insurance but because of cost. It's a bonus to them if they actually cover anything.
    Rae
    22nd Aug 2017
    1:05pm
    Pretty well sums up the whole LNP government sponsored for profit compulsory business arrangements.
    KSS
    22nd Aug 2017
    1:24pm
    I highly doubt it is the 'high income earners' that are the main drivers of these policies OG. It is far more likely to be those who just fall over the line and who have reached the age of 31! Given that the medicare levy cuts in at around $90k which is only slightly above average wage, those people are not really 'high income earners' but do benefit from the difference between the premium and the levy. And it also protects them going forward where they would not have to pay the additional 2% per year for each year over 31 they have not held the insurance.
    52-KID
    22nd Aug 2017
    8:44pm
    Wow! I wish the average wage around here was just under $90k. I only know one and he is on a very high wage because of his qualifications - and he is just over the $90k.

    On a different note, I was checking out private health insurance just the other day, and am thinking that extra cover could suit me as I have regular chiro and massage, and have just added physio to that. Add optical as well, and I would be a little better off.

    I also toyed with adding private hospital cover, but at an extra $120 odd dollars per month, that's definitely out of my pension price range - I'll put up with the wait.
    Nan Norma
    22nd Aug 2017
    12:26pm
    Seems to me its all about greed in the private medical system today, be it insurance, hospitals or doctors. They all overcharge. saying that I have a wonderful GP who bulk bills and never rushes you. I have never had insurance.
    In Qld we get free optical and dentist.
    KSS
    22nd Aug 2017
    1:18pm
    I think there are two separate issues here being confused into a single cause for concern.

    The first the so called 'junk policies' that don't offer much cover but allow the holder to avoid an increased medicare levy. I would suggest that these would be mostly held by the 31+ healthy individuals who are firstly avoiding the extra tax and second protecting the lower premium rate they would pay in the future by having had private health insurance since the age of 31. I seriously doubt they ever expect to need to claim on the insurance since that is not the motivation for having it in the first place. And even if they did get sick, they would be treated under medicare anyway. Its a cheap option for now.

    The second, that of finding out you are not covered for something you thought you were, is a far more concerning issue and one that would affect far more people. This is an issue borne of two courses of action: a) people don't bother to review their health insurance needs over time and just keep paying the required premium each year; and b) the insurance companies keep downgrading the inclusions yet increasing the premiums each year so what you may have been covered for last year, you may not be this year or next.

    The first issue I really have little care about. Unless you are going to mandate that if you have health insurance you MUST use it and refuse access to medicare in hospital for example, at least the holders of the junk policies are subsidising to some extent other more beneficial policies. Getting rid of them won't necessarily lead to more people buying better policies since health cover is not the main motivation in the first place.

    The second is really down to inertia by the policy owner in not shopping around or understanding and reviewing exactly what they are covered for each year.

    We can all sit back and blame the insurance companies but people are their own worst enemies. People have to take responsibility for how they spend their money. As they say, "a fool and his money are soon parted". And there are plenty of willing takers!
    floss
    22nd Aug 2017
    4:01pm
    Privatise and perish god what a mess our politicians have made for Australians.It is their fault we are getting ripped off at every turn, some one is making a killing.Our doctors are right up in the rich list, some not all.
    Nan Norma
    22nd Aug 2017
    8:39pm
    So true. There are a few good GP's but for so many now its all just a business.
    Kathleen
    22nd Aug 2017
    4:57pm
    I am happy with ours. I research and change when necessary. No excess on day surgery was the appeal of the latest choice. Premiums are also low. You are able to choose your surgeon based on their cost and reviews. Our private health fund is based in Tasmania and offers two levels only. We have chosen the top cover but younger ones can choose the lesser for their needs. We intend to continue with private health cover. It is up to the consumer to shop around carefully. There are some good ones.
    Common sense
    22nd Aug 2017
    6:09pm
    Eat healthy food and exercise frequently, reduce alcohol intake, quit smoking, Less health problems, less need for health insurance. Remember, prevention is better than cure.
    LarryFine
    23rd Aug 2017
    8:43am
    I review my policy on a regular basis but have found that none of the funds will give you a detailed breakdown of your cover and how much they pay for various items. They only give a general tick box list of coverage.
    How can you compare policies???
    Any suggestions would be appreciated
    Kathleen
    26th Aug 2017
    10:24am
    Ask for these details. Let them know you are shopping around.
    Sandy
    2nd Aug 2019
    10:49am
    Yes, it is junk!