The most comprehensive reforms to hit the private health insurance industry in almost 20 years are scheduled to be announced today, including discounts on premiums for those aged under 30 and a drive to make a mental health safety net part of standard coverage.
Health Minister Greg Hunt will today announce a list of private health insurance reforms, including categorising policies as Gold, Silver, Bronze and Basic Bronze, and more power for the Private Health Insurance Ombudsman, reported The Australian.
The key reform that will immediately translate to lower premiums next year is a measure to cut prices on the prostheses list, which sets the price insurers must pay for medical devices. The insurance industry has long argued it is overcharged, compared to Australia’s public system and those in comparable countries.
The prostheses reform is said to represent A$1.5 billion (US$1.17 billion) in savings to the private insurance industry over the next four years. The measure includes a four-year agreement between the government and the Medical Technology Association of Australia.
To attract young people to take out health insurance, insurers will offer discounts of 2% a year for a maximum of five years for people aged between 19 and 29. The discounted rate would remain until they are 40, after which it would be phased out. Attracting more young people into private health insurance is critical to keeping the sector sustainable in an ageing population.
In the mental health arena, privately insured patients entering hospital with a mental illness will be offered an immediate upgrade of their policy to fully cover mental health, with no waiting period, reported ABC.
Recent industry statistics have shown that mental illness has now overtaken non-Caesarean childbirth as the leading causes of hospitalisation for women under 30. For men under 30, mental illness is in the top three causes of hospitalisation, after dental and sporting injury.
Under the revamp, health insurance products will be categorised into four levels of cover — Gold, Silver, Bronze and Basic — to help consumers understand what types of services their insurance buys. The government believes new categories will help Australians compare private health insurance products and shop around for a better deal.
Health insurance premiums have increased by an average 5.6% a year since 2010. Rather than an annual premium rise of 5-6% next April, the government aims through the revamp to keep premium increases as low as 3%.
Basic entry policies (so-called “junk policies”) that only cover treatment in a public hospital will continue because the thousands of people with these policies would face a 16% premium rise to move up to the next level of cover if they were scrapped.
The role of the Private Health Insurance Ombudsman will be expanded and strengthened, allowing it to conduct inspections and audits of private health insurers to ensure they are meeting regulatory obligations.