19th Oct 2017
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New document reveals health insurance reform benefits
Author: Olga Galacho

An exclusive document obtained by YourLifeChoices on health insurance reforms reveals the expansion of mental health coverage and extra travel benefits for regional policy holders will be a boon for low-income, older Australians. 

However, other elements of the reforms may be too complex to play out, such as changes to  treatment of private patients in public hospitals, according to a summary provided by St Vincent’s Health Australia (SVHA).

SVHA, Australia’s largest Catholic not-for-profit health and aged-care provider, also reported that policy holders would theoretically have premiums reduced once the recommended cuts to the prostheses benefits take place from February.

Next year, insurers stand to save $188 million through reduced spending on tens of thousands of products on the prostheses list, including feeding tubes, gastric bands, eye lenses, stents and other small medical items used in surgery.

Insurers have said that every $200 million in prostheses benefits cuts decreases premiums by one per cent. Thus, a policyholder paying $1000 in health insurance a year could expect to save $10 on their premium.

“Expenditure on prostheses accounts for 14 per cent of private health insurance hospital benefits paid annually,” the SVHA summary said.

“Evidence suggests that the prostheses list benefits are generally inflated when compare to the equivalent prices paid for devices in the public sector.”

SVHA welcomed the enhanced mental health support to be introduced next year to improve   access to inpatient services.

Currently, only high-level policies offer significant cover for mental health care.

“Patients with basic and medium level cover who require overnight or multi-day care in a private hospital for a serious mental health conditions will usually face large out-of-pocket costs,” SVHA said.

“Waiting periods for upgrading cover can prevent patients from accessing timely care.”

The Government’s changes will, from next April allow, mental illness sufferers to upgrade their health cover and avoid the existing two-month waiting period for in-hospital care.

And in one of the biggest pluses of the reforms, sick Australians living in regional and rural areas will have extra travel and accommodation benefits covered by their policy, depending on which insurer they use.

From April 2019, insurers will offer the additional benefits under hospital cover instead of only under general treatment policies.

SVHA said: “This will benefit regional and rural patients and their carers who need to travel for hospital treatment undertaken away from home … when that treatment is not available in their area.”

New measures to reclassify the eligible benefits in each of four health insurance policy standards – basic bronze, bronze, silver and gold – “will allow people to clearly understand the product they are buying,” SVHA said.

Opinion: Are these the kindest cuts they could muster?

The virtually-universal lukewarm response to “the biggest shake-up to private health insurance” the industry has seen is, to say the least, understandable.

While there are some moderate wins in the Federal Government’s reforms – quicker access to mental health services and subsidised transport and accommodation for out-of- town patients – there really is nothing convincing in the sparse detail to suggest health insurance premiums will be cut.

Premiums have soared on average close to 6 per cent each year since 2010. It is believed the Government hopes that next year’s rise will be less than 4 per cent.

Fat chance! First of all, why are they going to rise by close to double the inflation rate? Second, where are the costings that suggest insurers will reduce their outlays significantly enough to pass on savings to policyholders? Third, who is going to police the trickledown savings? And finally, who is to say there isn’t some unexpected price shock around the corner – like a warranted increase to nurses’ wages – that causes insurers to jack up premiums instead?

You know, unexpected price shocks such as when carbon pricing was scrapped and we were all promised much lower electricity prices? Remember that?

What happened instead was the delivery of the steepest hikes in power bills in living memory. All because someone forgot to factor in that the electricity distributors were intent on ‘gold-plating’ their poles and wires and were given permission by the regulators to pass those costs onto us.

St Vincent’s Health Australia (SVHA) has summarised the expected outcomes of 17 government proposals to make ‘private health insurance simpler, more affordable’. Just four of them were expected to ‘reduce’ private health insurance premium ‘increases’. You read right. Any likely decrease would be to the amount extra that premiums will cost going forward. The four measures are:

  • higher excess charges to be paid by policy holders in exchange for lower premiums
  • a cap in the amount medical device makers charge for their products
  • a 10 per cent cut to what private health insurers have to pay for thousands of medical products used in surgery, such as stents and catheters, as detailed on the prostheses list
  • knocking off a slew of natural therapies from being subsidised.

It is safe to say that none of these strategies will actually make much of a dent in what you pay for health insurance.

Even if the insurers’ estimate is correct that for every $200 million slashed from the prostheses benefits list, premiums will cost one per cent less, how much is that? A policyholder paying $1000 in health insurance a year could expect to save $10 on their premium. Wow … hold the front page.

And as for the other category killer feeling the scalpel – natural therapies ­ well, this might turn out to be an own-goal. The Government has decided that there is “no clear evidence demonstrating the efficacy of the listed natural therapies”, which includes little-heard of and probably much less used alternative treatments such as Rolfing, Buteyko and Feldenkrais.

But other therapies, such as yoga, tai chi and Pilates, which promote movement and flexibility, surely do have benefits that keep people healthy and out of the medical system. And further, they are more likely to appeal to younger Australians who the Government is desperate to attract to private health insurance. Removing cover for therapies such as these is surely only going to dissuade healthy young people from bothering with insurance?

The Government’s proclamation that these reforms are the “biggest shakeup” in the sector is a huge exaggeration. There is nothing “big” about them, especially on the sort of savings that policyholders can expect.

Currently, there is a Senate inquiry under way called ‘Value and affordability of private health insurance and out-of-pocket medical costs’. It is due to report on 27 November.

Curiously, it has virtually the same terms of reference that the federal Health Department used ahead of announcing its reforms last week.

There seems to be too much talk and not enough action on whether health insurance is ever likely to be reasonably affordable.

How many more probes do politicians need to discover the obvious? Are we all being taken for a ride by insurers? Do you have private health insurance? Do you think it is good value? Should natural therapies be subsidised by health policies?

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    COMMENTS

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    Placido
    19th Oct 2017
    10:32am
    May not make much of a dent in fees but could reduce the amounts refunded in areas like cochlear implants and cataract surgery.
    Quite a few items used in these operations ate in the "prostheses list"
    MICK
    19th Oct 2017
    1:05pm
    Don't be fooled by the next magician's trick.
    Electricity prices BS, but you will continue to face increasing bills.
    Banks had the finger waved at them, but will continue to rip off their customers because they can.
    Health industry had another finger waving exercise, but will continue to increase premiums by double or triple the rate of inflation.

    I pretty well ignore this government. A lying pack of big business controlled malicious misfits. Don't believe a word from them as they have done their dash and are known to be liars, so anybody who trots out their propaganda is either a fool or a member of this machine.

    You couldn't sell me health insurance if I lived in Chernobyl and I'll take my chances in life. Had a pretty good innings methinks and the rest is cream.
    pedro the swift
    19th Oct 2017
    10:45am
    What everyone seems to forget is that health insurance is a BUSINESS. Its out to make a PROFIT for the shareholders. They don't really give a fig for the consumers. So consumers "may" save $10 on their premiums in the future. Big Deal! Just watch when that time or the "saving" comes around and it will be swallowed up by "extra costs".
    No! private health insurance is not worth it!
    The health of the nation should be a government concern and properly funded by gov. just like defense and political perks.
    Kathleen
    19th Oct 2017
    12:01pm
    Health insurance is certainly worthwhile for me. My husband not so much but he will go to the dentist and get glasses. For the latter he will claim for lenses in December and frames in January and pick them up in January. He does have a dodgy knee and life is unpredictable so he is on high level cover for peace of mind.
    If you choose well then private health insurance is as important as food and other necessities so long as you can afford $30 a week in your budget.
    john
    19th Oct 2017
    12:21pm
    Exactly, modern private health insurance is a racket, and a racket in the wrong area, in a country where people actually, privately health fund themselves, but have conditions galore to follow to get cover, as I said in extras , the racket really gets hold of you, until politicians are forced out of the shell of bulldust , and into a proper government run health system , we will continually get ripped off.
    Sometimes people on private health because of circumstance wind up in a public hospital under that system what the hell are they paying premiums for.
    All insurance is almost criminal, because the fact that even in car crashes some poor individual even faultless has to pay an excess, WHY FOR GODS SAKE , if you ae paying thousands and thousands of dollars into premiums but have one crash in ten years you may as well have saved it.
    And that is what will happen eventually people just won't insure , because the crook are the insurance companies not the hit and run that shoots through after a prang.
    That is a generalisation I know , but it is a factual generalisation, and who owns the politicians backsides????? We all know!
    You know big business could still make massive profit even if they didn't rob their customers. They might just get more customers?
    Alexii
    19th Oct 2017
    8:21pm
    You are quite right, Pedro. I've had excellent treatment throughout Medicare.
    Tib
    19th Oct 2017
    10:51am
    I don't have insurance. I would probably get insurance if it covered any procedure I had, but too often my out of pocket costs were very high and the cost of insurance is also very high and getting worse, so I don't bother. A couple of years of premiums saved will cover the cost of a fairly expensive operation. I don't see insurance as good value.
    Kathleen
    19th Oct 2017
    11:58am
    $25,000 for surgeries like knee replacements. This is the quote for a friend in Canberra so she waited in agony although she could afford that.
    My private health fund covered a recent colonoscopy with nothing to be paid by me.
    I pay $120 per month so way ahead just going to the dentist and having a colonoscopy which was $2000 all up.
    john
    19th Oct 2017
    12:26pm
    Well I've had private funds for years, and I would probably have close to 50,000 dollars if I 'd banked that money, the reason I know is I have a close friend who has done just that and reckons we are all mad.

    And what about Hunt , on the TV the other night, how this skinned do you have to be to be in that game and come out with a rosey story and tell the world , when it is simply nonsense, and it will save buggar all, for any of us.
    Must get off now, subject is driving me into a very angry mood!
    Tib
    19th Oct 2017
    1:40pm
    Grandmakat I've had minor knee surgery and a colonoscopy and while I could pay for the operation I wasn't in any pain so I went on the list. Cost me nothing. I do remember having surgery when I had insurance and I remember paying almost a third myself by way of a gap. I do have extras cover so i get my dental work and glasses. I find this good value as I have a lot of old filling to replace , I seem to be coming out ahead at the moment. If I had $25000 dollars worth of surgery I would probably come out a behind on what I've saved but not for long. In any case I have the cash available if I didn't want to wait. If you have money insurance isn't so important.
    Alexii
    19th Oct 2017
    8:31pm
    Grandma Kathleen, in the past 2 years I've had surgery for cancer (successful treatment too), 4 cystoscopies a hernia operation and a colonoscopy. The total value is many thousands of dollars and it was all on Medicare. BTW, three of the cystoscopies and the cancer surgery were all done as urgent. Why have private hospital cover? It would not have been any better than what I had as a public patient.
    Old Man
    19th Oct 2017
    11:02am
    What concerns me is the figures quoted for the increase in health insurance fees each year. The percentage increases quoted bear little resemblance to the actual percentage increases. Our health insurance provider stated that the increase was 4.2% but our premium went up 13.9%. When queried, the answer was that the advertised increase was the "average" increase. I asked what the range of increases were and how many were affected by each range but was politely informed that the details were confidential".

    To make matters worse, politicians will trumpet how they have stared down the health insurance providers and have forced a saving for the voters. We are told that the original request was for a, say, 6% increase but the Minister forced the increase back to 4.2%. It's all a game to make us believe that we are better off when we are getting shafted. I would love to see the annual premium rises made transparent with an independent audit of the proposed increases. It's very easy to manufacture an average percentage which looks good but does not tell the whole truth.

    In saying all of that, my cynicism tells me that one shouldn't stand on one leg waiting for any health insurance provider to reduce premiums. My bet is that their PR people will crow about how the increases are much less than previous years because of regulation changes. Politicians will photocopy this and send it to voters.
    Bren
    19th Oct 2017
    11:49am
    Anybody know someone who paid LESS than the average increase ? If the average is true then there should be quite a few of them pulling the average down. Everyone I know was slugged more than the average increase. Where are these others hiding ?
    Kathleen
    19th Oct 2017
    12:07pm
    I changed ours based on this and free day surgery with no excess to be paid. Then I chose a big excess for lengthier hospital stays.
    What they do is compound the increase which they are allowed to do. Put it on different aspects then add them up. Shocking!
    If people put pressure by pulling out of any that do this and shop around and get a better deal they might think twice about doing this. I think some of the big ones may be the worst culprits.
    You can also split your hospital and extras and choose two funds.
    in2sunset
    19th Oct 2017
    12:23pm
    Old Man, exactly the same with me. I too got the same lame excuse when my premium increased 12.4%. When the fund was boasting 'an average of 4.6%'. That means some rates went down, which I defy happened to anyone. Was also told was due to 'my age demographic' (so seniors get plugged more), and the level fund I was in. Well perhaps if the fund I was in only covered me what I really wanted and needed instead of things like IVF, weight loss survey, kidney dialysis, etc, then it wouldn't increase so much. Instead, funds lump practically everything now in to top tier policies.
    john
    19th Oct 2017
    12:28pm
    AND MOST VOTERS ARE STUPID ENOUGH TO BELIEVE THOSE POLITICIANS.
    Tib
    19th Oct 2017
    1:59pm
    In2sunset so older Australians pay more and probably subsidise younger Australians.
    ianjs
    19th Oct 2017
    11:14am
    You can't have it both ways. If you are going to complain about costs then you should welcome the dropping of ineffective "natural" therapies.

    Funds should be paying for therapies that have been proven to work, not inflating costs by covering the latest fashions in quackery.

    Oh, and keeping them on to attract (presumably more gullible) "younger Australians" would have to be the worst argument I've heard.
    Jennie
    19th Oct 2017
    11:52am
    Well said. I am horrified that homeopathy users should ever receive benefits. OK, a safe placebo, but you are paying for water.
    anonysubscribe
    19th Oct 2017
    11:59am
    where would I get a copy of the summary report by stV's? cannot find it with your links.

    2How many more probes do politicians need to discover the obvious?
    they need to be seen to be doing something for the poor pay they earn. otherwise the public might get the mistaken idea that they actually will make principled decisions on wire ranging inquiries aimed at improving the effectiveness and efficiency of the public interest. (not the public service which they take turns decimating in the interests of economic management).

    Are we all being taken for a ride by insurers?
    Insurers control their puppets on these inquiries. The puppets do their bidding. It would be wrong to limit the blame to inquirers. Unfair to blame politicians who are careful not to do anything too drastic otherwise their private interest in getting reeelected might be in jeapordy.

    insurers and politicians are clubs. with overlapping memberships.

    Do you have private health insurance?
    yes

    Do you think it is good value?
    no but the alternative of relying on the public system has been warned against by affluent doctors I know and I respect the more affluent members of society so therefore I should listen to these great men.

    Should natural therapies be subsidised by health policies?
    better to pare back private insurance to the basics and run an efficient public universal system of care for the greatest good of the greatest number. hope I am not investigated for this unpatriotic suggestion.
    this government lives so that the greatest good for the greatest number of cronies is fulfilled.
    don't wish to offend my betters, guv.
    Kathleen
    19th Oct 2017
    12:10pm
    Ours is good value at $30 a week each. No excess for day surgery.
    Relying on the public system in the big cities especially is not what we want.
    This is probably just the government getting us to look away from the real issues anyway!
    john
    19th Oct 2017
    12:13pm
    I pay for myself and my wife a private top cover of $4316 dollars a year. Its around $166 per fortnight , we think we need it now, but we can hardly afford it. I still believe the private health insurance industry is a bloated confusing operation that does not cover everything. What it should cover is everything that Medicare doesn't. 1% saving in a premium for me is about $43 dollars a year. That's a $1.66 per fortnight. IT MEANS NOTHING.
    Our health insurance industry pays executives large salaries, I assume they put our premiums into the market place to invest as well as pay out the small and never fully covered gaps. Unless you are in hospital, but extras are a racket. Its guess work.

    So they really are profit making private endeavours, since Whitlams universal health scheme run and owned by the government , was massacred by Mr Fraser and co, and privatised, Medibank has been a cash cow, for private business, the fact that you have to jump through a dozen hoops to get anything back and that it is so confusing as to what you are entitled to, speaks for itself as a slippery operation from word go, with the main characters being the accountant bean counters working out operating ideas for profit, and
    NOT COVER. Then of course, we hear the usual excuse that specialists and doctors and talk of this Prostheses list, is so expensive!

    If we get a better deal after this very very late intervention , I 'd ask why not before this.

    The more I talk the angrier I get about this. We are a foolish bunch we Aussies we get talked down to, over charged and ripped off, left right and centre, and it goes on!
    Kathleen
    19th Oct 2017
    12:48pm
    You need to shop around for a better deal. You can always tell your fund that you are investigating better deals and see if they come to the party with a better deal. I have done that with extras and they basically halved the cost.
    We are paying less than $3,000 a year for top hospital and top extras so yours is far too much.
    You are paying nearly $1500 more than we are and we are getting no excess on day surgery and most back on dental and all back on hospital including doctor and anaesthetist.
    ianjs
    19th Oct 2017
    1:02pm
    That seems pricey. Do you have extras cover John?

    I dropped this and saved over $1000 per year. Extras "cover" is not really insurance at all (where you are covering for a large risk) - more like a savings plan as the amounts they will pay out are strictly capped.

    If you add up how much you claim back (or even CAN claim back) you may well find that you are well ahead by dropping it.
    ianjs
    19th Oct 2017
    1:06pm
    Hah! Yes, GrandmaKathleen22 I switched from Medibank after ringing them for a better price and they were on the phone to me in the 30 day cooling off period offering an 8%(!) discount.

    I told them they should have offered it earlier and I was getting a better price elsewhere.
    Tib
    19th Oct 2017
    2:10pm
    Grandmakat which insurance company are you with?
    Tib
    19th Oct 2017
    2:14pm
    Yes John that's about the same quote I got. $43000 in ten years plus interest that's a lot of surgery.
    Kathleen
    20th Oct 2017
    10:49am
    Tib
    hciltd.com.au (Health Care Insurance based in Tasmania)
    KSS
    19th Oct 2017
    12:49pm
    I seriously doubt there have been any 'young people' who bought health insurance just for the yoga or pilates rebates! And in any case it is not every provider of those things that can process the rebates anyway. And if those things were to continue there is big argument to include gym fees too because there IS evidence that a progressive weight training program can mitigate and even reverse type 2 diabetes and this would be a much cheaper option than keeping people on diabetes medication for the rest of their lives with all the attendant co-morbidities that will eventually arise.

    And health insurance (or any insurance for that matter) it not worth it until you actually need it. Then it is priceless!
    ianjs
    19th Oct 2017
    1:08pm
    Agreed, but exercise and training are hardly "alternative" - there is good evidence for them.

    Not sure if "paying gym fees" is the same as "doing training" though ;-)
    KSS
    19th Oct 2017
    1:31pm
    The DO lighten the wallet and trim the bank balance though ianjs! :-)
    Tib
    19th Oct 2017
    1:52pm
    KSS Your comment about weight training is interesting , I would have thought aerobic exercise would help not weight training. I have a few free weights in the garage, some people think paying gym fees is doing something about their health they forget about doing the exercise.
    KSS
    19th Oct 2017
    7:39pm
    The program was developed by the Baker IDI Institute in Melbourne and is being rolled out through gyms by Fitness Australia. Its called Lift for Life. Look it up because it really is interesting and in fact weight training is proving even better than cardio activity and even some drugs!
    Tib
    19th Oct 2017
    8:32pm
    Thanks KSS . Looks like a good program. I've always done weight training. My family is prone to diabetes , I haven't had a problem , it's probably the weight training. I was thinking I was getting too old for it but this has made me decide to continue. I have weights in the garage by the time most people get to the gym I'm finished my training session. It's the best way to do it. Cheap too.

    19th Oct 2017
    1:25pm
    Health insurance is a SCAM.
    Triss
    19th Oct 2017
    4:29pm
    Agreed, but the alternative seems to be long waits for necessary [not emergency] surgery.
    floss
    19th Oct 2017
    3:37pm
    Don't look at me I didn't vote for THE Libs I know a few silly pensioners that did and are now winging about the cost of living etc. going up ,don't some people ever learn.
    Triss
    19th Oct 2017
    4:31pm
    No, they don't and they still won't at the next election.
    The Black Fox
    19th Oct 2017
    4:07pm
    We've been with a West Australian not for profit health insurer for years and feel that they have generally been fair and reasonable. Now that we are well into our seventies we are a bit scared to drop private health insurance anyway. As country based full pensioners we will welcome any saving that can help mitigate the costs of treatment where it is only possible in the metropolitan area.
    Unfortunately we have a double whammy cost wise - we also pay for our daughter to be privately insured as she has serious and ongoing health issues and can't pay for it herself. The dilemma she faces is that she can't always wait for the public system e.g. there was a two year waiting list for major sinus surgery in a public hospital as against six weeks privately. The same specialist worked in both systems.
    Total cost for full hospital cover is $8,374 out of an income of $34819
    Kathleen
    20th Oct 2017
    10:56am
    You can do better than that. That is a lot even for three adults.
    Is it only hospital and not extras as well?
    We are paying $30 each per week for top hospital and extras.
    For three that would be less than $5000.
    We have no excess on day surgery but we do choose an excess on lengthier hospital stays.
    Stroudie
    19th Oct 2017
    4:25pm
    My insurer, NIB, seems to think it's ok to sponsor football clubs while still passing on annual premium increases !
    Tom Tank
    19th Oct 2017
    4:33pm
    The current government are protecting the heath insurance industry as they protect the banks.
    They are pat masters of spin which effectively is simply pulling the wool over our eyes.
    The worst thing they have done, to date, is privatise Medibank as that has given an open slather to all the other funds as now the government have no real means of controlling them.
    There are too many funds carrying too many marketing, sales, accounting and managerial staff which add enormously to their costs and hence premiums charged to customers. I haven't even mentioned the outrageous salaries and bonuses paid to CEO's.
    We are getting ripped off.
    MjP
    19th Oct 2017
    5:19pm
    I will continue to have private health insurance because last year my late wife was in hospital for four and a half weeks before passing away. She had the benefit of a private room which meant that when the family came to visit we could all sit around and be with her. Also she had an amazingly compassionate doctor with the very best 'bed-side manner', thank you Dr Malik for the amazing care you provided.
    Kathleen
    20th Oct 2017
    11:08am
    MjP, sorry for your loss.
    Glad you had that especially the doctor who sounds amazing.
    George
    19th Oct 2017
    9:52pm
    Nothing wrong with most of the changes to drive down the cost of insurance, provided they ensure these cost reductions ARE PASSED ON to customers. Especially good IF policies are standardised so that comparisons can be made between products of different companies.

    However, these changes do not address serious key issues - Health Insurance needs to be real insurance i.e. it should pay for ALL costs with NO GAPS and not let the risk of Gaps be passed on to Customers. To achieve this, Govt also needs to put Maximum caps on Doctor's and other providers' fees. Finally, Govt MUST impose a strict cap on maximum increases each year.
    Hope the Senate Review does a better job!
    Kathleen
    20th Oct 2017
    11:05am
    That all makes sense.
    Also stop reducing government contribution which is very sneaky as never announced.
    Rosscoe
    20th Oct 2017
    11:33am
    Excellent article! Governments of both major parties have allowed health funds to implement excessive premium increases. There needs to be an investigation into these businesses. They have been ripping consumers off for many decades.
    Maggie
    21st Oct 2017
    8:54am
    I agree that private health cover is expensive. Having said that I thank heaven that I have it and will continue to buy it as long as I can afford it. The benefits are:

    + being able to get help without waiting in a queue in agony for years sometimes
    + being able to choose my doctor,
    + having a private room: NOT HAVING TO SHARE A BATHROOM WITH MESSY STRANGERS,
    + not having stickybeak, inconsiderate ward mates whose visitors take over all the chairs at visiting time
    + I have had some incredibly expensive devices trialed and implanted in the last year and these combined with other visits to hospital for cancer and a broken shoulder have cost my provider several hundred thousand dollars. Medibank has paid up, no quibbles, no questions asked.

    Yes, my premium is high: $2580 a year but I am happy to make the necessary cuts to afford this even if it means living on sardines and eggs and potatoes and not having as many drinks as I would like!

    If my payment helps people who are unable to pay for private cover (and I do know and understand that there are many) to get treatment that's the cherry on the top.
    Kathleen
    22nd Oct 2017
    8:31pm
    Maggie, you are a lovely person to think of others.
    We are both covered for what you are paying.
    You could be paying far less and getting the same benefits.
    You don’t lose anything to change or demand a better deal from your present fund.


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