OLDER HEALTH FUNDS IN GUN

“The system merely classifies existing policies and does not change them.” GREG HUNT

MORE than a million health fund members will have their insurance policies axed forcing them to shift to new and possibly more expensive cover in the industry’s biggest shake-up in 20 years.

News Corp can reveal up to 14,542 older health insurance products will be scrapped because they won’t comply with the new tier of gold, silver, bronze and basic classification system to be introduced next year.

Health funds are under increasing pressure to keep average premium rises below 2 per cent as the Federal Government tries to match Labor’s election pledge to freeze premium rises at that level for three years.

Leaked government documents also reveal that three years from now, taxpayers will be spending over $6 billion subsidising health insurance products where two out of three people won’t be covered for the most common procedures in private hospitals.

This could force insured people back on to public hospital waiting lists.

The analysis by Deloitte shows under the reforms 4.3 million Australians with cheaper bronze level cover will escape a premium rise next April and this is expected to help lower the average premium rise.

But the higher insurance cover price pause is due to people with bronze cover no longer covered for key procedures like hip and knee replacements, cataract surgery, pregnancy and birth and lung services. The reforms will dramatically increase the cost of silver and gold health cover which will rise by between 8-12 per cent in April next year, the leaked analysis shows.

The reforms are not anticipated to stop membership decline with up to 50,000 expected to drop their cover. The biggest winners from the reforms will be health funds who will maintain their profit margins of 11.5 per cent.

Health Minister Greg Hunt has said consumers won’t suffer major disruption and will likely be able to keep their existing products because health funds will be able to offer silver and bronze “plus” products.

“The system merely classifies existing policies and does not change them,” he said.

Opposition health spokeswoman Catherine King said the leaked modelling showed Scott Morrison’s private health insurance “reforms” would force up prices or rip away coverage for millions of Australians — all while protecting the profits of the “big insurers”.

HCF chief Sheena Jack said her fund was looking at adjusting and deciding whether to close older products as a result of the reforms.