The Australian Medical Association (AMA) yesterday issued its Private Health Insurance Report Card 2019 to provide consumers with clear, simple information about how health insurance really works.
The 2019 Report Card also shows a system on a precipice. Increases in premiums are averaging 3-5% a year, while wage growth is stuck at around 2%.
Premiums are going up because an ever-increasing number of younger and healthy Australians are opting out of private health insurance.
Australians have now seen four years of decreasing hospital treatment coverage as a percentage of the population, from 47.4% in the June quarter of 2015, to 44.2% as of June 2019. In the same period, the number of people holding private hospital coverage (with hospital treatment products) fell from 11,276,328 to 11,227,569 – a difference of 48,759
However, this decline is not even. Younger cohorts are dropping their insurance, leaving a higher concentration of older, high-claiming members in the system.
The number of people covered by private health insurance has declined in every age group up to age 60, with the biggest fall in the 20-39 year-olds. Meanwhile, the number of people with private health insurance is rising for every age group over 60, particularly among 70-79 year-olds. There are almost 100,000 fewer 20-39 year-olds and 360,000 more people over 60 insured now than five years ago
The Report reads, “The Government must build on the reforms of 2018 and start to address indexation and variation in rebates and insurer contracts. We need to work to bring back the value in insurance policies, before it is too late.”
The AMA calls on the government to ensure that the private health sector remains efficient, robust, and productive.
The 2019 Report Card, which is the fourth annual edition to date, provides the latest comparison of the proportion of hospital and medical costs covered by each fund, and examples across a number of common procedures of the different levels of benefits provided by funds.
2019 has seen the implementation of government reforms to private health insurance, including the creation of Gold, Silver, Bronze and Basic categories of health plans. New insurance policies began to be categorised under this system from 1 April 2019 , and by April 2020 all products must fully comply with the new arrangements.
The Report Card highlights the varying levels of benefits and gaps across policies and the significant variation that can occur on a state-by-state, basis even across the same insurer.
Gold, silver and bronze
Australians are still confused about their private health insurance options and are being scammed despite the reforms aimed at simplifying the system, according to findings from research commissioned by consumer lobby group Choice.
Changes introduced earlier this year were designed to make policies easier to understand — labelling them as gold, silver, bronze and basic with “plus” versions of some categories also available.
But Choice analysis has found more than 215 silver and silver-plus policies that cost more than gold policies from competitors.
However, the private health insurance industry’s peak representative body, Private HealthCare Australia, dismissed the allegations, reported ABC News. Private HealthCare Australia chief executive Rachel David said, “There will inevitably be some overlap between the categories as health funds compete with each other on price and values but the important thing is consumers are now much more easily able to compare between policies.”