Health insurance changes: the good, the bad and the unfair
The government's health insurance reforms appear likely to deliver lower premium increases in the medium term and hopefully clearer consumer-friendly policies provided the insurers uphold their end of the deal and pass on savings.
This should be a breath of fresh air for families and individuals under pressure and contemplating dropping their cover after years of above inflation premium rises each year.
The government has set an ambitious target of around $1 billion in savings over several years for health funds resulting from changes to prostheses pricing.
We expect that consumers should receive the full benefit of these price reductions.
Measures including the introduction of simpler categories of policies, and the exclusion of treatments for which there is no evidence are all steps in the right direction.
The improvement in access to cover for mental health care is a much-needed provision given the demand for these services and their greater availability in the private sector.
A further positive development is the plan to boost the powers and resourcing of the health insurance ombudsman to assist people to make more informed choices about their policies, and to investigate claims of wrongdoing by health funds.
Enabling improved inclusions in policies for people in rural and remote communities will support those patients needing to travel to the cities for treatment.
However the plan to provide discounts for younger members threatens to undermine the community rating principle fundamental to Australian health insurance which is meant to treat everybody equally regardless of age or health status.
Health funds presumably are hoping that more young members will help subsidise the more costly demands of older members.
Given the cost burdens and modest wages many young people have, it would seem likely that this measure is only likely to be taken up by a minority of young adults who have the means, with the result that the two-tiered health system emerging in Australia is entrenched at an even earlier time of life.
The fact remains that the private health insurance industry attracts a large government subsidy and we maintain that it is timely to scrutinise its value to the community overall.
This is why the Consumers Health Forum together with other groups has called on the government to institute a Productivity Commission inquiry into government assistance for health insurance.
We do particularly welcome the establishment of two expert committees to review out of pocket costs and low value policies.
If these committees can get to the core of these issues and trigger effective changes, they will be delivering a much-needed improvement to health insurance.
Changes to private health insurance
- requiring insurers to categorise products as gold/silver/bronze/basic, and use standardised definitions for treatments to make it clear what is and isn't covered in their policies;
- upgrading the privatehealth.gov.au website to make it easier to compare insurance products, and allowing insurers to provide personalised information to consumers on their product every year;
- boosting the powers of the Private Health Insurance Ombudsman and increasing its resources to ensure consumer complaints are resolved clearly and quickly;
- reducing the benefits paid for implanted medical devices under an agreement with the Medical Technology Association of Australia;
- requiring insurers to allow people with hospital insurance that does not offer full cover for mental health treatment to upgrade their cover and access mental health services without a waiting period on a once-off basis;
- allowing insurers to discount hospital insurance premiums for 18 to 29 year olds by up to 10%, with the discount phasing out after people turn 40;
- allowing insurers to expand hospital insurance to offer travel and accommodation benefits for people in regional and rural areas that need to travel for treatment;
- increasing the maximum excess consumers can choose under their health insurance policies for the first time since 2001.
- preventing insurers from offering benefits for a range of natural therapies, such as Bowen therapy or Rolfing;
- continuing to support private hospitals, including transferring administration of the second tier default benefit, which provides a safety net for consumers attending non-contracted hospitals, to the Department of Health.