Private health cover ‘still a mess’ despite reforms, says CHOICE

Reforms take effect, but CHOICE is still critical of the system.

Funds still a mess

Consumer advocacy group CHOICE has run the rule over recent reforms in the health insurance sector and has come up with the key elements it believes older Australians should know about. But it says the system is “still a mess” and that the Productivity Commission needs to get involved. spokesman Jonathan Brown says gold, silver and bronze were meant to make health insurance simpler, “but unfortunately at CHOICE we’ve found that this market is still a mess.”

“The changes started from 1 April, but health funds have until next year to implement them,” he says. “We’re hoping that the intention of simpler health insurance can still happen and we’re asking the Productivity Commission to look into this.

“It’s vital to make sure Australians can avoid nasty surprises and high costs when they most need their health insurance.”

Addressing the issue of the bundling of specialist services – which has upset a number of YourLifeChoices members – and the reality that older Australians need to pay for categories they are unlikely to use, Mr Brown says: “Simplifying health insurance is all about avoiding claims shock – that experience where you think you’re covered for something, but get to hospital in an emergency and realise you’re not covered.

“We’ve heard awful stories of people stuck with unexpected bills and having to choose between financial security and their health. While there might be services in silver or gold that you don’t expect to use, as a community we provide coverage for each other, so no one is left behind.

“The alternative is that people in the community who have high health needs can’t access help because they’re deemed too costly.”

So what should you be looking out for in relation to changes in your cover? CHOICE offers the following guidance.

1. The new tiers
The biggest change is that the Government has created four tiers of health insurance, and health funds must categorise their policies by these tiers:

  • Basic – very little if any cover in private hospital
  • Bronze – low cover
  • Silver – medium cover
  • Gold – full or top cover

There are also Basic Plus, Bronze Plus and Silver Plus policies, which cover at least one service in addition to normal Basic, Bronze or Silver policies.

Your insurer will have moved you from your old policy to a replacement policy, which will fall under one of these tiers.

Items that were covered under your previous policy may now be split across tiers, so the first thing you should do is check if your new policy covers you for what you need.

2. Do you need to upgrade your cover?
As you age, you’re more likely to need certain types of treatments and surgeries.

For instance, about 65 per cent of hip and knee replacements carried out in Australia are for people aged over 65.

Older people are also more likely to end up in hospital, with over-65s accounting for more than 40 per cent of day and overnight hospital admissions, even though they account for only 15 per cent of the population.

So which tier do you need for common treatments?

To be assured of cover for heart surgery, you would need silver or gold and for joint replacements, cataracts, dialysis, rehabilitation and palliative care, gold is required.

CHOICE tip 1: You might find cover for these items in lower level tiers, but it’s not guaranteed. If you go for a lower level, you’d want to check the policy over time to make sure the fund doesn’t drop the cover.

CHOICE tip 2: If you’re upgrading your cover, a 12-month waiting period applies for conditions you weren’t covered for on your old policy. So if you require surgery, make sure it’s scheduled for after you’ve served the waiting period.

3. Should you take advantage of a new higher excess and reduce your premiums?
Under the reforms, you can pay a higher excess than previously (up to $750 per person and $1500 per couple/family) which will reduce your premiums (an excess is a sum of money you pay towards a hospital visit).

But if you think you will need surgery within the next two years, you’re better off with a policy that has a lower or no excess. You might pay a bit more for the premium, but you won’t be as out of pocket from the hospital stay.

And if this does apply to you, and you don’t currently have a policy with low or no excess, you should probably switch as soon as possible, as it will take 12 months to take effect.

If you only need day surgery, such as cataract eye surgery, look for a policy that doesn’t charge you an excess for day surgery.

Note: The number of times an excess is payable per calendar year varies depending on your cover.

4. Should you drop health insurance altogether and self-fund your health needs?
If you’ve already got health insurance, CHOICE does not recommend self-funding your hospital cover. Many insured people already pay thousands of dollars in out-of-pocket costs, so paying hospital costs and the full medical gap could be a very expensive proposition.

Consider also these factors:

  • Australians aged 60 to 79 use their hospital insurance more than any other age group.
  • When you reach 65, you’re entitled to a higher rebate, i.e., the amount the government pays, and which helps reduce your premiums. For singles with an income of up to $90,000 and couples/families earning up to $180,000, you’ll go from a 25.1 per cent rebate to 29.2 per cent. This will increase to 33.4 per cent at 75.
  • When one member of a family or a couple is 65, the government rebate applies to the whole family or couples policy.
  • You could consider dropping your extras cover and funding those services (dental, optical, physio and so on). It doesn’t make sense to have extras cover unless you claim back more than you pay for it each year.

Have you called your health fund to ensure your cover is still the best fit? Did you change anything? Do you have any tips to pass on to other members?



    To make a comment, please register or login
    23rd Apr 2019
    Yes to above but still the same rule applies in that you need to revisit your private health cover at least annually. We have changed yet again. Our extras now only cover dental which we just tested out and received the checks free and little else to pay on extra work done.
    Gold cover is necessary for us oldies and our excess is $500. You need to shop around for specialists and hospitals beforehand. Contact your private fund before you go to hospital.
    Our cover is now $288 which is manageable for us. We can’t afford to drop it. We don’t go to restaurants or have overpriced coffee out, etc. we don’t drink or smoke, etc.
    $70 per week for two gives us peace of mind. It is part of our budget. It is a priority to us.
    Cowboy Jim
    23rd Apr 2019
    Same here, at our age we keep paying it, going to the dentist shortly again and normally that is covered. Might have to look at the excess as ours is lower and that might make a difference. Just paid the yearly dues to save on the increase, all up $5250! Without all these cost increases some of us could be self funded. When you do the sums you come to the conclusion that applying for a part pension is well worth it.
    Ted Wards
    23rd Apr 2019
    I think the biggest mistake we ever made was in the 1980s when we dropped the model of Primary Health Care, or taking measures to prevent illness from occurring. I believe we are far too reliant on the medical system and many do not take responsibility for their health and preventing issues. I think we should be focusing more on rewarding preventative measures, but I guess there are no profits in that..., or are there?
    23rd Apr 2019
    You can do all that but bones still break and parts get old and worn out like knees and hips. Hearts attack as well! You cannot predict it all and that is why you insure. Some of us have better genes as well.
    My sister had a stroke recently and that is another one. She got excellent treatment in the public system which prompted me to ask would she drop her private cover and she replied no because acting lists are too long for so called elective surgeries.
    One part of the stroke treatment is where she was taken to rehabilitate and all showers and toilets were shared and she picked up a bug in her toe which she has not been able to cure even after stays in hospital on drips and multiple antibiotics. Still trying to address that! Actually!
    23rd Apr 2019
    I said 40 years ago that health will come down to putting a gun the doctors head and saying..'..You fix or I shoot'. I still believe that.
    Cowboy Jim
    23rd Apr 2019
    40 years ago you could get a gun very easily down here but try now. Maybe you have to use a poison needle, easier to come by.
    23rd Apr 2019
    I said 40 years ago that health will come down to putting a gun the doctors head and saying..'..You fix or I shoot'. I still believe that.
    23rd Apr 2019
    Agree that Private Health Insurance becomes more a priority as we get older. And as for these people who simply say that the Public System is just as good - yeah? - only 2 days ago, our local paper had a lengthy article on the lengths people have to wait for some medical procedures. MINIMUM time for a hip replacement - over 300 days. And that is AFTER the wait time to see a specialist.
    But these new levels are a bit of a farce. I shop around every year, and even with these changes, it is hard to find the right one. I DO NOT want to be paying for cover for pregnancy, IVF, Weight loss surgery - BUT if I want to be covered for joint replacement, have to be in Gold Level which covers these useless procedures. And of course, pay a premium rate.
    23rd Apr 2019
    We did a shop around and came up with Mildura Health Fund, a nice surprise as we have our cover back under $300. Take a look and if you are lucky enough to live around there then you get free day surgery and other goodies. We are not but we are still happy with our cover.
    I think it evens out as young ones don’t need cover for what we do yet they have to pay gold level for pregnancy related cover.
    23rd Apr 2019
    Just another stuff up from the Morrison Mob they just go around in circles as the gap between the have and the have nots gets bigger.
    23rd Apr 2019
    Well said! Hopefully soon the mongrels will be voted out.

    23rd Apr 2019
    Private health insurance is a SCAM. Wake up, people!
    23rd Apr 2019
    You might have the money to pay if it came to that and you could not wait for a knee replacement or other surgery considered elective but many of us do not but we can afford a bit each week to protect us.
    It gives us peace of mind.
    23rd Apr 2019
    I might just move out bush to a town with a hospital
    23rd Apr 2019
    I might just move out bush to a town with a hospital
    Cowboy Jim
    24th Apr 2019
    Mate of mine did that but had to be flown to Brisbane for his operation. The town he went to has a hospital but it was not equipped to handle his problem.
    24th Apr 2019
    There has been no explanation about who was behind this stupid set of reforms. The CHF (Communications Health Forum) CEO said in the above linked previous YLC article that “Very powerful interests are involved in this and a lot of money is at play.” There has been utter secrecy around this matter, and as expected the end result is "still a mess" as CHOICE has confirmed.

    The Private Health Insurance system is fully broken, as previously discussed in YLC, and the so-called new reforms haven't addresses basic things - such as Gaps, uncontrolled Doctors fees, maximum limits on rebates (limiting their risks, and putting risks on the consumer - hence NOT insurance), ridiculous annual insurance increases with no link to CPI, etc.

    Finally, the stupid reform now forces the elderly to take out Gold Insurance (unnecessarily also including pregnancy, etc), as all levels below it won't cover the most common things the elderly need such as "joint replacements, cataracts, dialysis, rehabilitation and palliative care,". GO BACK TO THE DRAWING BOARD, and preferably, appoint a Royal Commission into this rip-off industry which is massively subsidised by the Govt.

    YLC needs to include a Question to all political parties now before the election - will they fix this mess / broken system (even after the reforms), if so how, or else why not?
    25th Apr 2019
    Still no change to the Gap which can be in the thousands of dollars for some surgery, even with private health cover.
    25th Apr 2019
    Cowboy Jim - $5250 is expensive. We pay just a bit less than annually that for house, car and private health insurance all together in the European country I live in. The cost of insurance in Australia is excessively high because there are not the population numbers among which to spread the risk.

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