The government has introduced private health insurance reforms that will be effective from 1 April 2019. The changes have been designed to simplify health cover by introducing a tiered system that will overhaul the current cover. They apply to current arrangements, as well as new policies.
The reforms mandate what will be in each of the four categories – basic, bronze, silver and gold. This means that all products in the same product tier will cover the same services and treatments as all other policies in that tier. Jesse Petterd from iSelect says “this is to make it easier for you to compare hospital products. You’ll know exactly what’s included in your product so there are no nasty surprises.” The Grattan Institute’s health program director Stephen Duckett also is happy with the change, “This will benefit consumers as in the past consumers bought insurance and weren’t receiving cover for what they thought they were getting which led to a lot of complaints. The tiers will clarify the cover and make it clearer so there will be fewer complaints and consumers will be able to compare private health insurance cover easily.” Insurers are able to offer additional “plus” coverage in the basic, bronze and silver tiers, creating an almost infinite variety of combinations in potential policies.
Although the changes are seen as a positive change for consumers, the increasingly soaring costs of insurance has caused many Australians to opt out. According to the latest private health insurance statistics by the Australian Prudential Regulation Authority (APRA), only 44.6% of people are covered – the lowest it has been in 11 years. APRA reported that 12,370 left their hospital treatment membership in the December quarter. The largest decrease was among people aged between 25 and 29. To help encourage those in that age bracket and to help lower policy prices, health insurers are offering a 2% discount on hospital cover for each year that a person is under 30 when they first purchase the insurance. The discounted policy can reach a maximum of 10% off annual premiums.
Premiums on average are also suspected to rise 3.25%. In the last five years, premiums have increased by 25%. Private Healthcare Australia chief executive Rachel David says “The only reason premiums increase is because input costs are rising and health funds are paying for more healthcare as our population ages.”
Insurers will now be able to offer travel and accommodations benefits as part of hospital policies which will benefits people living in rural or regional areas that are required to travel to the city for treatment.