Action is Needed to Break The Health Insurance Price Cycle

Almost 40,000 people have responded to an online survey launched by The Government’s Department of Health at the beginning of November, a number which vastly exceeded the expectations of Minister for Health Susan Ley.

On the 8^th of November, The Government released a survey on private health insurance in order to provide better value to consumers. Minister Ley was quoted as saying that the reason for the survey was to “recalibrate the private health system so that value for money for consumers returns to being its core focus”.

And within 5 days more than 20,000 people had contributed, increasing to 40,000 by the 5^th of December. Ms Ley labelled the response to the survey as ‘phenomenal’ and announced the extension of the survey by an extra 2 days in order to accommodate consumer demand.

“To have upwards of 40,000 responses to a voluntary Government survey in just four weeks is unheard of and shows private health insurance really is the new barbeque-stopper,” Ms Ley said.

Although the larger than anticipated number of responses means the results have not been officially collaborated yet, Ms Ley says the clear message from the responses is that the majority of respondents are unhappy with the value for money they are receiving from their current health cover.

In particular, ongoing premium increases of 5-6 percent every year play a large part in consumer dissatisfaction with their health cover. This is worsened by the fact that some insurers are apparently set to raise premiums for the next decade. Respondents feel that action is needed to ‘break the vicious cycle’.

Ms Ley said she would investigate whether a stronger public-interest test was needed to support Government when approving premium increases, including consideration of an insurer’s full financial position.

“I acknowledge health costs are going up for insurers, as they are for Government. This is the trade off to the positive benefits of living longer, more prosperous lives”.

“It’s become clear that the current system for approving premium increases doesn’t allow (the) Government to apply enough rigour to an insurer’s full financial position”.

Ms Ley said that after reviewing the results of the findings, she would be putting insurers on notice that their applications for future premium increases would be more heavily scrutinized based on their financial position.

A full version of Minister Ley’s announcement can be found here.

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What do we look for in a health fund?

Private health insurance is extremely popular, with almost half of all Australians having hospital cover, and more than half having extras cover. There are a number of different hospital inclusions that one can get as a part of their cover, and there are a range of contributing factors that might cause someone to choose these inclusions. According to CANSTAR’s 2015 selector tables, the most commonly-sought specific  hospital inclusions are for:

• Cardiac (heart)
• Joint replacement
• Knee reconstruction

For those looking for extras (ancillary) cover as well, some of the common inclusions sought are:

• General dental
• Major dental
• Physiotherapy

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