According to federal health minister Sussan Ley, quoting from APRA statistics, more than 500,000 Australians dropped their all-inclusive (also called “non-exclusionary”) health insurance policies in the 2014-2015 year, a figure that was offset by an additional 558,000 exclusionary policies (health policies with hospital cover that exclude certain medical services and also require patients pay an excess and co-payment) being taken out. According to Minister Ley, this points to consumers downgrading their cover to save costs, partially as a result of successive cuts to the value of the private health insurance rebate.
Health Insurance means testing
In 1999, the federal government introduced a private health insurance rebate to help Australians with the cost of private health insurance premiums. In July 2012 this rebate began to be means-tested and the proportion of rebate that you receive is now dependent on your income threshold and your age. The current rebate levels are here.
ACCC concerns about complex information
In October the ACCC released its report on the private health insurance industry, highlighting concerns about the impact of complex information on consumers and the market.
The ACCC report contained the following three key observations:
- There are market failures in the private health insurance industry which reduce consumers’ ability to compare policies and make informed choices about their future medical needs.
- Existing regulatory settings can change consumers’ incentives in purchasing health insurance. As insurers respond to market demands for affordable policies there are greater risks of unexpected out-of-pocket costs for consumers.
- Current practices by some insurers are at risk of breaching the consumer laws.
“The ACCC is concerned that the complexity of private health insurance policies can affect consumers’ ability to make informed decisions about the policy that best suits their needs. Whether a consumer is purchasing health insurance for the first time, or reviewing and renewing a policy after many years, they have to navigate through a range of issues to make an informed decision,” ACCC Deputy Chair Delia Rickard said.
Confusion about health insurance
According to Minister Ley, consumers may be looking to save money on their health insurance premiums without understanding the implications of downgrading their cover.
“I’m deeply concerned the true pain of Labor’s multi-billion private health cuts is only now being felt by consumers as their prepaid policies expire and bill shock kicks in,” Minister Ley said.
“A longer-term trend of premium increases above inflation across successive governments also suggests there is a something wrong with the regulatory foundations of our private health system.
“Either way, consumers are angry, confused and I’m concerned that simply shopping around is no longer enough to get the best value for money.
“It’s important we’re able to ask consumers what they expect from their private health insurance and there’s plenty of room to do that without moving towards US or UK models that exclude sick people and make it only available to the rich, which we don’t support. Consumers can have their say via our online survey: www.health.gov.au/PHIconsultations2015-16.”
Not universally applauded by industry
As well as inviting the public to have their say, the government is holding a series of roundtable discussion with industry – and there may be some heated debate.
The Doctor’s Reform Society, as an example, has labelled the government’s mooted suggestion to allow GP visitors to be covered under private health insurance as “the height of hypocrisy”.
DRS President Dr Peter Davoren said “the Government is worrying about co-payments for people who can afford private health insurance when at the same time it is claiming price barriers are essential to reduce overuse of GPs and is forcing GPs away from bulk-billing by freezing the Medicare rebate for GP visits”.
“The tax-payer will again pick up the tab for spiralling health costs driven by ever increasing doctors’ fees, said Dr Davoren. “At the same time it will make primary care more inaccessible for all those people without private insurance who will struggle with increasing co-payments”.