Can you understand your private health insurance?

Ross Greenwood speaks to Acting ACCC Chair Delia Rickard about why the ACCC is calling on private health funds to make policies more transparent after finding in its annual report.

Introduction: Can you understand your private health insurance?

Ross Greenwood: Welcome back to Money News right around Australia. Today, the ACCC, the Australian Competition and Consumer Commission put out, I think its 19th report, into the private health industry in Australia. Now, a few things because we’ve talked about it so many times in this program that are not necessarily a real surprise. Say for example number one, consumer complaints keep rising. Number two, that consumers remain concerned about the affordability of private health insurance. Well, it’s not rocket science here of course they are because you’ve seen for almost the past decade, that the price rises for private health insurance premiums have air stripped the rate of inflation or wages growth by at least two or three times a year.

Also, that there is significant action still undertaken by the ACCC in the private healthcare system. Now, there’s been a number of reviews that have taken place and enforcement matters as well. The issue is health costs in Australia continue to rise, especially with our aging population and her expectations lifestyle and health outcomes that we have. Delia Rickard is the acting chair of the ACCC. She’s on the line right now. Many thanks for your time Delia.

Interview with: Delia Rickard, Acting Chair, ACCC

Delia Rickard: Hi Ross, I feel nice to be here.

Ross Greenwood: You’ve been conducting these annual reports into private health for, or private health insurance for some 19 years now, and yet, it would be argued that the situation has got worse and not better. That’s not necessarily your fault as such I’d say because you are reporting this information. Even necessarily, the information hasn’t helped the outcomes.

Delia Rickard: Look, we’ve seen some minor changes and some improvements over time. It is indisputable that there was a real problem in terms of the affordability of private health insurance and people’s ability to understand what they are paying for, and to compare options to work out what’s the best policy for them in the price range that they can afford.

Ross Greenwood: As far as I can see, there are a couple of problems here. Number one, you sign up to a policy and either you are stuck there almost, it seems, for life because you don’t know how to change or there’s not enough information to allow you to make a realistic comparison if you seek to change. Number two, that you’re not 100% certain what you’re insured for. Then, when you try and unbundle it, it’s very difficult to do so because if you take it outside, for example, in my case, where you wouldn’t need to have obstetrics or any of that type of stuff, but you try and take that out, and a whole bunch of other stuff falls out as well.

The third aspect of it is that even if you were to consider going to another health insurer, you don’t know quite what the rules are in regards to gap. If you seek health treatment at some stage, you’ve got to go to the right doctor or the right surgeon in the right place, otherwise, you do end up carrying a big load of the bill.

Delia Rickard: You’re right. That preferred provider arrangement is one of the things you absolutely need to ask about when you’re getting health insurance. If your fund does have preferred provider arrangements, which generally means that if you use one of the doctors who is with the preferred provider, you won’t end up with a gap payment or it will be a lot smaller, whereby if you use somebody else who’s not one of those, it will cost you more. It may be that they don’t have any preferred providers in your area or in the hospital that you like to use. It’s one of the many things we need to be questioning our funds about.

Ross Greenwood: Do you believe right now that no ordinary person picking up their private health insurance policy statement can genuinely understand it and make meaningful comparisons with say, a competitor’s product? That’s where I think it’s still there’s a significant shortfall in the way in which this information is presented.

Delia Rickard: I don’t think you’re going to get any arguments from me or anyone else at the ACCC on that. What we’ve been trying to do with our reports in recent years is really encourage consumers to provide clearer, simpler, yet fuller information about what you will be covered for, what you won’t be covered for, what their preferred provider arrangements are, how to go about working out whether there’ll be a gap and what it will cost you, what your out of pocket expenses will be, if you’re working out whether or not you can afford to have a procedure.

Ross Greenwood: Do you think also as part of what you’ve done, that there’s a problem with comparison websites? Where there are those out there that might say, “All right, if you can’t work it out yourself, here’s a comparison website, off we go, and you can work it out. By the way, here’s the number of the firm.” Are they getting paid clearly a commission to do that? Like mortgage brokers and banks. The point is, it seems to me that in some cases, not all of the funds are actually covered by some of those comparison websites and you don’t quite know what the deal is between them and the health fund.

Delia Rickard: I think that’s exactly right with the commercial comparison sites. The private health insurance ombudsman does have a website that is free to use. privatehealthinsurance.gov.iu. I think I’m giving you the right address there. That is free to use and it has all of the funds in the system on it. It’s a site which has been progressively improved and updated in recent times. I think there’s a number of reforms that the government is in the process of putting in place that will also help. At the moment, when you purchase a policy, you’re given something called a Standard Information Statement.

It really doesn’t provide you with the information you need to work out what you will unlike get under a policy and how to compare apples with apples. They’re putting in place a new minimum data set, which we’re making a number of recommendations to, to really ensure that consumers get the information they need. The government’s also are proposing the privatehealth.gov that I use. They’re also proposing to categorize products as gold, silver, bronze, and basic. Gold would be pretty much covered for everything. There might be some gaps.

Then, the further down you go, the more exclusion, procedures that aren’t covered or the higher excesses you’ll need to pay to access those things. You need to make sure you’re comparing like with like. That will, I think, assist people to do that and work it out. What’s going to be the right thing for them in their circumstances? Of course, none of us know that because none of us know what’s going to happen tomorrow in terms of their health.

Ross Greenwood: That’s precisely right as well. privatehealth.gov.iu is that site. Do remember that Australians played at around $23.1 billion worth of annual premiums in 2016, 17. Also consider if you think of that, the biggest is Booper right now, the biggest 27.6% market share followed by Medibank 26.3 and then HCF, NIB and HPF, have a combined market share slightly bigger than Medibank’s 26.3%. The acting Chair of the ACCC, Delia Rickard. Delia, always great to have you in the program.

Delia Rickard: Great talk Ross, take care.

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Image source: 2GB 

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