Government Reforms: 'Gold, Silver and Bronze' Health Insurance

25 July 2018
The government released details of next year’s health insurance reforms and consumers can expect their health insurance policies to be ranked under ‘Gold’, ‘Silver’ and ‘Bronze’ categorisations.


Ever found yourself confused or overwhelmed by a health insurance policy?

You’re not alone. There are currently more than 40,000 policy variations available to the average Australian, a level of complexity which the Australian Competition and Consumer Commission has repeatedly expressed concern over

Compounding the problems facing the industry is rising premiums, which has seen some policyholders reduce or cancel their level of cover for financial purposes. This means both an increase in the number of Australians with inadequate cover or without private health altogether.

Back in June 2016 the Turnbull Government, in an attempt to combat these issues of complexity and consumer confusion, proposed a major revamp of Australia’s private health insurance system. Its plan involved creating three simple categories for health insurance policies: Gold, Silver and Bronze.

The plan didn’t materialise at the time, but the government has now announced their system for categorising health insurance products will be introduced from 1 April 2019. Here’s how it’ll work.

What will the new tiered system do?

The main goal of the new system is to make it easier for consumers to decipher the relative value of a health insurance policy. While reports of how the system would work have been reasonably speculatory up until this point, the government release announcing the news confirmed a number of details  of the scheme:

  • Hospital cover policies will be sorted into Gold, Silver, Bronze and Basic product categories
  • Each tier will have a set of minimum standards which a product must meet to be eligible for inclusion in said tier
  • Insurers will be able to offer additional levels of cover within the Basic, Bronze, and Silver categories – for example, a product which only qualifies for the Bronze category could still offer aspects of Silver-tier coverage

The government said “the new product tiers will give consumers greater certainty about the services covered by each type of hospital treatment product”, and that “the changes will make it easier to shop around and compare different hospital treatment products to find one that meets individual needs.”

Why are these reforms needed?

Health insurance premiums won’t stop rising – they go up by anywhere between 2% and 5% every year – and these increases in price do not always mean increased coverage or decreased associated fees.

As mentioned, this has led to a number of consumers either reducing or forfeiting their private health cover. As a result, former health official Shaun Gath warned insurers may increase the price of entry-level health insurance products to compensate for the widespread decreases in cover.

Mr Gath said “as more members move into these (cheaper) categories of cover, it will force insurers to reprice ‘entry level’ products to better reflect the …underwriting risk.”

Both the Private Health Insurance Ombudsman and the Australian Competition and Consumer Commission also voiced concerns. The Ombudsman has been ringing alarm bells over the high number of complaints received over the year concerning private health insurance policies. The ACCC has raised concerns over the increasing number of policies and the increase in exclusions, restrictions, excesses and co-payments.

If you’re feeling dissatisfied with your current health insurance policies, you can compare a range of different policies to look for the best-value one for you with Canstar.

The table below displays a snapshot of 5-Star hospital & extras policies on Canstar’s database with links to providers’ websites, sorted by provider name (alphabetically). Please note the results are based on a single male born in 1980, living in NSW.

Click here to compare more policies based on your circumstances.

What are the requirements for each tier?

The government release detailed the coverage any given product must offer to be eligible for inclusion in each of the four new tiers. The requirements were as follows:

Hospital treatments by clinal category Basic Bronze Silver Gold
Rehabilitation xR xR xR x
Hospital psychiatric services xR xR xR x
Palliative care xR xR xR x
Brain RCP x x x
Eye RCP x x x
Ear, nose, and throat RCP x x x
Tonsils, adenoids, and grommets RCP x x x
Bone, joint, and muscle RCP x x x
Joint reconstructions RCP x x x
Kidney and bladder RCP x x x
Male reproductive system RCP x x x
Digestive system RCP x x x
Hernia and appendix RCP x x x
Gastrointestinal endoscopy RCP x x x
Gynaecology RCP x x x
Miscarriage and termination of pregnancy RCP x x x
Chemotherapy, radiotherapy, and immunotherapy for cancer RCP x x x
Skin RCP x x x
Breast surgery (medically necessary) RCP x x x
Diabetes RCP x x x
Heart, lung, and vascular system RCP x x
Blood RCP x x
Back, neck, and spine RCP x x
Plastic and reconstructive surgery (medically necessary) RCP x x
Dental surgery RCP x x
Podiatric surgery (provided by an accredited podiatric surgeon) RCP x x
Implantation of hearing devices RCP x x
Cataracts RCP x
Joint replacements and spinal fusion RCP x
Dialysis for chronic kidney disease RCP x
Pregnancy, birth, and neonates RCP x
Assisted reproductive services RCP x
Weight loss surgery RCP x
Insulin pumps RCP x
Chronic pain RCP x
Sleep studies RCP x

x: Indicates the treatment/service is a minimum requirement of the product category. The service must be covered on an unrestricted basis.

xR: Indicates the treatment/service is a minimum requirement of the product category. The service may be offered on a restricted cover basis.

RCP: Restricted cover permitted: indicates the treatment/service is not a minimum requirement of the product category. Insurers may choose to offer these as additional services on a restricted or unrestricted basis.

Blank: Indicates the treatment/service is not a minimum requirement of the product category. Insurers may choose to offer these as additional services; however, where offered these must be on an unrestricted basis.

What has the reaction to the reforms been so far?

Lobby group Private Healthcare Australia welcomed the changes, with CEO Dr. Rachel David describing it as “a major improvement to how consumers choose and use their private health insurance.”

“A fully transparent private health system, where the consumer is in control of their choices, is one that will be stronger and more sustainable in future,” Dr David said.

While the Federal Opposition was generally supportive of the inbound measures, they did express concern about the government’s supposed lack of action on low-cost, ‘junk’ health insurance policies.

“What we’ve seen increasingly under this Government is more and more complexity in the sorts of products that are around, more exclusions, more excess payments, more gap payments in those products, and less value for money for consumers,” Shadow Health Minister Catherine King said.

“Labor has said is that we will remove the private health insurance rebate from those junk policies, in particular those ones that only offer private health insurance cover in public hospitals.”

However, Federal Health Minister Greg Hunt warned this approach would hurt consumers, arguing “the ALP wants to effectively knock out the basic categories, but that would lead to a 16 per cent price hike in private health insurance, which would drive hundreds of thousands, if not millions out of private health insurance.”

Private Healthcare Australia also defended cheaper, basic hospital cover policies, saying “the basic and bronze tiers also provide affordable entry-level products for younger, healthier people who frequently go on to upgrade as they get older and their life circumstances change.”

“The key issue with the lower cost tiers is effective communication to consumers about what is and isn’t covered so they know what they are buying.”

To find out more about the reform changes, click here.

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