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  • Connect

    Issue 16

  • A doctor’s life


    Health insurance reforms insights

    Peter Aroney

    Peter Aroney

    BComm, ACA

    Chief Executive Officer

    Doctors’ Health Fund
    Doctor fund main image

    Two years ago, a series of reforms were introduced by the government to simplify private health insurance and address its affordability. Looking at this ‘first wave’ of a reform package that remains ongoing, there have been successes while some key objectives are yet to be met.

    Consumers opt for quality cover

    The most significant initiative was the introduction of standardised clinical categories for inpatient hospital services, and the mandatory categorisation of all policies into Gold, Silver, Bronze or Basic.

    Over 70%1 of customers with hospital cover now hold policies categorised as either Gold or Silver, suggesting consumers value more comprehensive cover. This is despite the so-called ‘junk policies’ that continue to proliferate the market, all at varying price points.

    Although higher excess options were also introduced, there has been little movement of existing customers, but they have been more popular for new policy holders. Overall, more than 90% of customers hold a policy with an excess of $500 or less2.

    An array of options still remains

    The product categorisation process allows health funds to create ‘Plus’ policies. To use this ‘Plus’, the product must cover the minimum clinical categories for the tier but can include other categories at the discretion of the health fund. Consequently, over 1503 policy combinations exist in the market.

    While adding flexibility for insurers, this variability does conflict with the government’s objectives of simplicity and comparability, making it difficult for consumers to determine the value of their cover just from the product name or price. For example, despite Silver and Silver Plus policies covering fewer clinical categories than Gold policies, there have been reports of some lower-cover policies costing more for the consumer4.

    An independent review into the clinical category model is also underway to address concerns raised for consumers and treating doctors. This includes reviewing consumer feedback on the utility of the categories, and whether certain hospital treatments need to be better defined.

    Increasing uptake and access

    The optional offering of the age-based discount provisions, where 18 to 29 year olds receive a discount on their hospital premium, has been adopted by just over half of health funds, often only on selected policies5. Over 400,000 young Australians now receive a discount of between 2% and 10% on their hospital cover, with the significant majority benefiting from the highest 10% discount6.

    An exemption on the waiting period for psychiatric care is aimed to improve patient access to important mental health and drug and alcohol treatment services. So far, 8,500 people across Australia have benefited from this initiative to provide access to early treatment for acute mental health conditions7.

    ‘Second-wave’ reforms

    The government is now embarking on the second wave of reforms.

    In response to changing household trends, the age that dependents can remain on a family policy is proposed to increase from 25 to 31 years. In addition to this, the age limit for dependents with a disability is to be removed completely.

    Proposals are also underway to expand access to home and community-based mental health and rehabilitation care and to improve hospital certification processes.

    As part of this wave, the government is embarking on actuarial reviews of two key features underpinning our community rated system; Lifetime Health Cover (a loading applied when a consumer takes out private hospital cover later in life) and risk equalisation (the transfer mechanism between health funds that seeks to equalise the claims impact on funds with older than average memberships).

    What’s to come?

    As we look ahead, opportunities for further reform have been identified with regard to the private health insurance rebate, prosthesis pricing and the transparency of out-of-pocket costs.

    The government, alongside industry, must continue to focus on affordability and access while not sacrificing quality health protection. This last year especially, has highlighted the importance of access to our first-class health system.

    Doctors’ Health Fund continues to advocate for reform that drives the quality and access consumers deserve.

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    Doctors' Health Fund is owned by Avant and the only private health insurance fund created exclusively for doctors and the medical community.
    Find out more: doctorshealthfund.com.au


    1,2. Australian Government data.gov.au (2021). PrivateHealth.gov.au. Source: https://data.gov.au/data/dataset/private-health-insurance.
    3. Australian Government Department of Health (2021). Private health insurance reform data quarterly reports. Source: www.health.gov.au/resources/collections/private-health-insurance-reform-data-quarterly-reports.
    4. Wellings H, Turner-Cohen A. CHOICE consumer survey reveals health insurers are ripping off thousands of Australians. 7News, published 2 March 2021.
    5,6. Australian Government Department of Health (2021). Private health insurance reform data quarterly reports. Source: www.health.gov.au/resources/collections/private-health-insurance-reform-data-quarterly-reports.
    7. Australian Government data.gov.au (2021). PrivateHealth.gov.au. Source: data.gov.au/data/dataset/private-health-insurance.

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