News Life and Health11 Dec 2018

Australia:Call for productivity inquiry into private health insurance

11 Dec 2018

Several health and consumer organisations are urging the federal government to launch a Productivity Commission inquiry into private health insurance, saying Australians are facing high costs, poor value and increasing complexity.

The call comes amid new research by consumer organisation Choice that shows 69% of health fund members believe they are getting "average" or "poor" value for money, especially as annual premium increases outstrip inflation and wage growth, reported The Sydney Morning Herald.

Choice, Consumer Health Forum and the Australian Dental Association, as well as individual doctors and academics, are among 16 signatories of a strongly worded letter calling for an inquiry.

The letter said, "A Productivity Commission inquiry could look beyond the surface issues of private health insurance and examine whether the current structures, levers and incentives are delivering the best possible health outcomes."

Increased premium volume

Meanwhile, the Australian Competition and Consumer Commission's (ACCC) annual report on the private health insurance industry found policyholders paid A$23.9bn ($17.2bn) in premiums in the financial year that ended 30 June 2018– an increase of 3.6% – on the previous year's figure. This was despite hundreds of thousands of Australians either dropping their cover or shifting to cheaper policies.

ACCC deputy chair Delia Rickard said the high cost of health insurance was a real concern for consumers, especially with annual premium increases outstripping inflation and wage growth.

She said the shift towards cheaper policies was "bad news" as more people may struggle to calculate potential out-of-pocket costs or choose not to undergo a procedure they need to have.

She said it was "too early" to say whether the federal government's package of reforms to make health insurance simpler and more affordable, which kicked off in October 2017, was having a positive impact. From April 2019, insurers will be allowed to offer discounts to attract younger, healthier people and they can start categorising their hospital products into gold, silver, bronze or basic product tiers.

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