New private health insurance categories revealed

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Federal Health Minister Greg Hunt has revealed details of new private health insurance categories that come into effect early next year aimed at making private insurance more transparent and affordable, allowing Australians to find the most suitable cover.

However, not all of the changes – which take effect from April 2019 – will benefit consumers, says Australian Private Hospitals Association (APHA) CEO Mr Michael Roff.

The current 70,000 health insurance policies will be categorised into Gold, Silver, Bronze and Basic, the latter a renaming of ‘junk’ health policies that APHA has raised concerns about.

“These policies offer very little to Australians who hold them. They effectively mean Australians pay twice for public care they can access through Medicare, with none of the benefits of having access to a private hospital or private care.

“While large private health insurance funds argue Basic policies help people in rural areas access their choice of doctor, the evidence for this does not stack up. APHA research shows 60 percent of Australians treated in public hospitals did not get to choose their doctor.

“We believe the majority of people holding Basic cover are doing so to avoid the Medicare Levy Surcharge. Had this category been abolished, it is likely these people would have paid a bit more to keep their cover and ended up with a policy they could actually use in a private hospital,” Mr Roff said.

Each policy category will explain to consumers what their policy covers in one clear page of information. Along with that standard clinical categories will be mandated, as well as standard terms of medical treatment, all with the aim of making policies easier to understand and compare.

Complaints by people unhappy with their private insurance policies have risen by 30 percent, according to the Australian Competition and Consumer Commission’s annual report, which found that premium increases have been greater than inflation and wage growth in recent years.

Mr Hunt insisted the reforms would not increase the cost of healthcare, including pregnancy cover.

“In fact our reforms will make insurance more affordable, with insurers now able to discount hospital insurance premiums for 18 to 29-year-olds by up to 10 percent. The discount will phase out after people turn 40,” he said.

Mr Hunt said Basic and Bronze cover levels are affordable options, while Silver and Gold provide more comprehensive cover.

“Insurers will also be able to offer cover for clinical categories in addition to those listed as the minimum requirements for the Silver, Bronze, Basic product tiers, in which case the products may be named [Silver, Bronze, Basic] Plus (+).

“For the first time I am proud to mandate vital support for women under the Silver and Bronze categories, which will include gynaecological services, ovarian and breast cancer treatment and breast reconstruction,” he said.

Gold policies will provide the most comprehensive cover, including pregnancy.

Private Healthcare Australia CEO Dr Rachel David acknowledged reforms were necessary as costs and services to consumers were not sufficiently transparent.

“This new system takes a much-needed step towards putting the consumer and the patient back in control,” she said.

She said the inclusion of obstetrics in the Gold tier reflects the state of the market and will not alter premiums.

“Obstetrics is a high-risk, high-cost treatment area currently only covered in top hospital cover,” she said.

The ALP has promised to remove the rebate from Basic/Junk private health insurance policies.

 

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