The number of private health insurance policies with exclusions or co-payments has increased dramatically in recent years, according to a Senate committee report released this week. The exclusions mean that individuals who use the private healthcare system are left with a lower value policy.
According to the Australian Private Hospitals Association citing Australian Prudential Regulation Authority data, the number of people covered by exclusionary policies has increased from 7% in June 2007 to 40% in 2017.
The most commonly excluded services include: heart investigations and surgery, eye surgery, pregnancy and birth related services and hip and knee replacements, says the committee which carried out an inquiry into private medical insurance earlier this year.
In its report titled “The value and affordability on private health insurance and out-of-pocket medical costs”, the committee says that private health insurance premiums have risen at the same time that exclusions and co-payments have increased, leading some people to drop or downgrade their cover.
The committee received submissions that mentioned concerns about the complexity of private health insurance products and the lack of information provided by insurers. Many submitters noted that a greater number of available policies, changes to available benefits, difficult to understand terminology and a rise in non-comprehensive policies added to complexity for consumers.
Among several recommendations, the committee proposes that:
- the Commonwealth government undertake an evaluation of the value provided by 'basic' policies as a fourth product category (Gold/Silver/Bronze/Basic). Following that evaluation, the government should determine whether consumers are best served by a three-tier or a four-tier product categorisation system.
- the Minister for Health require private health insurers to publish all rebates by policy and item number. The Minister should instruct the Department of Health to publish the fees of individual medical practitioners in a searchable database.
- the Commonwealth and state governments ensure that public hospitals provide equality of access for public and private patients based only on clinical need and not on insurance status.
- the Commonwealth government review current regulations to allow private health insurers to rebate out-of-hospital medical treatment where it is delivered, on referral, in an out-patient, community or home setting.
- the Commonwealth government amend relevant legislation to prohibit the current practice of differential rebates for the same medical treatments provided under the same product in the same jurisdiction.
- the Commonwealth government require intermediaries to disclose any commissions received from private health insurers for the service.
- the Minister for Health amend the legislation to require private health insurers to provide adequate written notice of changes to policies and eligibility to allow consumers to consider alternatives, and that this notice clearly communicates changes to the policy that may affect the insured person's coverage, especially where such changes may be detrimental. Where relevant, the notice period should correspond to the eligibility period for any service or treatment affected by the changes.
- the Australian Competition and Consumer Commission, in consultation with the Private Health Insurance Ombudsman, commence work to establish a new code of conduct that will provide the framework for engagement between private health insurers and healthcare providers.