Private Health Insurance - Choice Article www.choice.com.au

The Minister for Health, Nicola Roxon, has announced that private health insurance premiums will go up by 5% on average, in August 2008. The actual increase you will pay depends on your fund, policy and the state you live in. Some policy conditions and features may also change. Insurance HQ would like to see companies with more than 1,000 employees to spend at least 9 percent of their payrolls on health benefits.

Those that pay less than 9 percent could be required to pay the difference to the state.

Insurance firms should have more flexibility to offer reduced-benefit plans or plans tailored to low-risk young adults. This would mean that young adults could buy insurance with low premiums but high deductibles.

Meanwhile let choice know about your health insurance experiences at healthinsurance@choice.com.au.

What kind of Health Insurance is available?
Broadly speaking, you can choose hospital cover and extras/ancillary cover. These are available separately or combined.

Hospital cover pays:

Some of the doctors’ fees.
A benefit for accommodation.
Some treatment costs in hospitals the fund has an agreement with.
It may not include cover for other costs such as phone calls or television sets.
Extras/ancillary cover contributes to:

The cost of non-hospital treatments that aren’t covered by Medicare. This usually includes dental or physiotherapy treatment and products like glasses and contact lenses. It may also include less common treatments such as acupuncture or podiatry.
The range of benefits paid varies between funds, and the payout is unlikely to cover the whole cost of the treatment.

Step-by-step guide to health insurance

Step 1: Do you need private insurance?
Every Australian is entitled to free treatment in a public hospital. Private health insurance can have the following advantages: more freedom to choose your doctor, shorter waiting times for elective surgery and access to private hospitals.

Step 2: How to save
Use our strategies to save money when taking out hospital insurance.

Step 3: Compare products
A key factor in choosing hospital insurance is which private hospitals a particular fund lets you use. It's also important to check restrictions that apply to the hospital cover you're considering. Some funds restrict the overall cover for extras by combining the maximum limits. For example a fund may offer $400 worth of physiotherapy and chiropractic in a year instead of $400 for each. This restriction can mean very large differences in how much you’ll get back.

Step 4: Read the fine print
Before signing up with any fund, read its brochure and key features guide thoroughly. If there’s anything about your entitlements that you don’t completely understand, write to the insurer and get written answers to your questions before you join. Our fine print checklist includes questions to ask when you take out insurance, when you’re reviewing it and before you go into hospital.

Step 5: How to switch
Health funds often claim it’s easy to switch. But switching can become stressful if things go wrong.

Private health insurance
Private health insurance premiums are rising and consumers are finding their policies have hidden exclusions and high gaps. Health insurance premiums are increasing but consumers are getting less for their money. Consumers are being offered products that do not cover common surgical procedures. Consumers are not always covered for what they think they are.  Many consumers face unexpected high gap payments when they attend a private hospital. Consumers sometimes face waiting periods if they change funds

Private health insurance premiums have increased 33% since 2001 even though the Government promised stable premiums when it introduced the 30% rebate and Lifetime health cover.

Exclusions
Some new policies exclude a whole range of procedures, such as major eye surgery and heart-related surgery. With exclusions like these it is difficult to see how they will relieve pressure on public hospitals – in fact they might do the exact opposite.

Gap charges
Consumers are facing significant out-of-pocket expenses that are not explained in advance. Recent research by the government showed this to be on average $720 per in-patient procedure. And 21% of people did not know they would be facing gap payments. In addition, 39% of those who faced gap payments also faced a fund excess, averaging $257.

Our view

The $3.6 billion (approx.) spent on the 30% private health insurance rebate is neither efficient nor equitable. That money would be much better spent in other ways – helping to fund Medicare and public hospitals, and allowing the government to buy cost-effective services directly from public hospitals.

Lifetime Health Cover has been an effective way to encourage healthy younger people to take out private health insurance, but it also traps people in health fund products they no longer want. The only fair and cost-effective mechanism for ensuring equitable health care is the tax system. Any system that does not ensure available resources are used to produce the greatest possible health benefit is ethically unacceptable.

What we want

Policies that do not cover common surgical procedures should not be offered.

Informed financial consent where patients are to be charged more than the Medicare and health refund rebate.

Health funds should provide new and potential members with information explaining any exclusions in detail and a separate section in the membership application requiring the member’s acknowledgement of the restrictions or exclusions applying to the product.

Some health insurance policies just not worth it. Review your health cover every year, especially if you have a policy with exclusions, limitations, a high excess or a co-payment.