Better value for money in private health insurance was a major federal election issue, and it appears that the current government is continuing to make it a priority. A new committee has been formed in order to provide informed, expert advice on the implementation and efficacy of a number of planned health reforms.
Easy-to-understand insurance categories, consistency of language across policies and the elimination of inefficient regulations around health insurance are just some of the changes the new committee will assist the government with. Your health insurance could very well be affected.
The need for change
"Private health insurance is a fundamental part of our national health system."
Minister for Health Sussan Ley explained how private health insurance is a growing concern for many people in modern Australia.
"Private health insurance is a fundamental part of our national health system, but the majority of the 40,000 consumers who responded to last year's survey told us the current system is frustrating and didn't offer good value for money," Ms Ley said.
This frustration and complexity is demonstrated in the Consumer Health Forum survey from January. Only about half of consumers were confident in their understanding of what their insurance actually covered – a clear indicator, some might say, of a system that is overly complex. Meanwhile, on the value side, only about three in 10 consumers indicated that they thought their policies kept their out-of-pocket costs low.
Combine this with the results of the Household, Income and Labour Dynamics in Australia Survey (HILDA) that found people were spending about 20 per cent more in recent years than in 2006, and a clear picture is formed. People think they are paying too much for a service that they do not fully understand the benefits of.
A worrying position
"The terms of this inquiry hopefully open the way to consumer-friendly, easier to understand policies."
This is a dangerous place for Australian private health insurance to be in. It appears that there is a need for serious change; change that many private health industry bodies have been quick to say will be easier to implement with the new committee.
"We have waited a long time for a thorough rethink of health insurance and we appreciate the determination and leadership of Health Minister Sussan Ley, to initiate reforms," explains Leanne Wells, CEO of the Consumers Health Forum.
"The terms of this inquiry hopefully open the way to consumer-friendly, easier-to-understand policies, address regulatory obstacles and develop better options for rural Australia."
Clearly, even major industry bodies are concerned with the current direction that private health insurance in Australia seems to be taking in public perception. This new committee could be the first step towards rectifying some issues within the sector.
Making things easier for consumers
One such problem is the implementation of new insurance standards; namely the gold, silver and bronze naming convention.
These new categories would clarify to consumers exactly what they are covered for under their current insurance plan. A bronze plan, for example, might be relatively basic cover. Meanwhile, gold would have more significant additions. According to the Liberal Party of Australia, this would let consumers know "what they are, and are not, covered for".
Considering the relative difficulty of comparing health insurance policies without expert assistance, it is likely this move will be welcomed by the majority of policy holders.
However, this is just the first step towards the proposed reforms. The changes may still be a fair amount of time off. In the meantime, you can get the right advice on what insurance package you need from the expert team here at HICA. Give us a call on 1300 44 22 01 or contact us online to find out how we can help you.