Pri­vate health in­sur­ance changes 'will lead to pre­mium hikes'

The Guardian Australia - - News - Melissa Davey

New rules de­signed to sim­plify pri­vate health in­sur­ance will leave thou­sands of con­sumers fac­ing sig­nif­i­cant pre­mium in­creases, the Grat­tan In­sti­tute has warned.

From April many of the 70,000 ex­ist­ing pri­vate health in­sur­ance poli­cies will fall into a gold, sil­ver, bronze and ba­sic clas­si­fi­ca­tion sys­tem, which will also fea­ture “plus” ver­sions of those cat­e­gories. Thou­sands of “junk” poli­cies will be scrapped.

While the health min­is­ter, Greg Hunt, said the land­mark re­forms would have an over­all neu­tral im­pact on pre­mi­ums, Stephen Duck­ett, a health econ­o­mist at the Grat­tan In­sti­tute, said some peo­ple would be more sig­nif­i­cantly af­fected by pre­mium hikes than oth­ers. Mod­el­ling from Deloitte con­ducted for the De­part­ment of Health had shown there would be a sig­nif­i­cant pre­mium rise for poli­cies fall­ing into the “sil­ver” cat­e­gory.

“What the mod­el­ling showed is there are sig­nif­i­cant pre­mium in­creases for some pack­ages fall­ing into the sil­ver, but not ev­ery­one else, and in fact bronze went down,” Duck­ett said.

“This is a ma­jor and com­plex tran­si­tion set to oc­cur, and some peo­ple will find their pol­icy has been cat­e­gorised as a lower level of cov­er­age and that as a re­sult their pre­mi­ums have re­duced but they have lost some of their cov­er­age for cer­tain con­di­tions.”

A health pol­icy an­a­lyst with the Cen­tre for Pol­icy De­vel­op­ment, Jen­nifer Doggett, ques­tioned how Deloitte had been able to con­duct mod­el­ling on the eco­nomic im­pact of the changes.

“The mod­el­ling would have to make a lot of as­sump­tions about con­sumer be­hav­iour, which is not al­ways ra­tio­nal in this area and which is very hard to pre­dict,” she said.

“Mod­el­ling has to rely on untested as­sump­tions about how con­sumers will re­spond to these changes so to claim any de­gree of ac­cu­racy is to draw a long bow, and for the gov­ern­ment to say pre­mi­ums won’t in­crease over­all is over­con­fi­dent.

“Part of what influences pre­mi­ums de­pends on the risk pool of the peo­ple in­sured. If peo­ple re­spond dif­fer­ently to how Deloitte has pre­dicted, and if more peo­ple drop or up­grade than pre­dicted, that leads to big changes to the risk pool, which will im­pact pre­mi­ums.”

Doggett said con­trary to claims that the new cat­e­gories would sim­plify in­sur­ance for con­sumers, she be­lieved it could make the sys­tem more com­plex.

“It may make the prod­ucts more uni­form but choos­ing be­tween those cat­e­gories can be quite com­plex and won’t deal with un­der­ly­ing struc­tural prob­lem that health in­sur­ance is in­her­ently in­ef­fi­cient and in­equitable,” she said.

“This is just more of the gov­ern­ment des­per­ately try­ing to save a sys­tem that’s fun­da­men­tally flawed with stop-gap mea­sures.”

The new rules an­nounced on Wed­nes­day mean in­sur­ers must also im­prove the in­for­ma­tion they pro­vide to con­sumers. A new pri­vate health in­for­ma­tion state­ment will in­clude manda­tory in­for­ma­tion about what each pol­icy cov­ers. Duck­ett said this in­for­ma­tion should be pro­vided to con­sumers at the same time they were no­ti­fied of their pol­icy’s clas­si­fi­ca­tion and pre­mium changes.

“You can be sure as eggs are eggs that the health in­sur­ance funds are go­ing to dis­guise their drops in cov­er­age,” Duck­ett said. “It will be in­ter­est­ing to see whether the in­sur­ers, when they send let­ters to con­sumers ex­plain­ing their cat­e­gory of cov­er­age and pre­mium rises, will also in­clude a

clear and con­cise ta­ble in that same let­ter telling con­sumers what they are cov­ered for.”

New poli­cies will be cat­e­gorised un­der the sys­tem by April, and by April 2020 all prod­ucts must fully com­ply with the new ar­range­ments. Un­der the changes Aus­tralians aged 18 to 29 will re­ceive pre­mium dis­counts of up to 10%, which they will be able to keep un­til they turn 40.

Peo­ple will be able to up­grade their cov­er­age to in­clude men­tal health ser­vices and avoid a wait­ing pe­riod. Aus­tralians liv­ing in ru­ral and re­mote ar­eas will also be more sup­ported, with in­sur­ers now able to of­fer travel and ac­com­mo­da­tion ben­e­fits as part of hos­pi­tal treat­ment cover for those those who can’t ac­cess treat­ment lo­cally.

The Med­i­cal Tech­nol­ogy As­so­ci­a­tion of Aus­tralia, the Aus­tralian Orthopaedic As­so­ci­a­tion, Pain Aus­tralia, Spine So­ci­ety and the Neu­ro­mod­u­la­tion

So­ci­ety of Aus­tralia New Zeal-

and are con­cerned that un­der the tiered

cov­er­age model, pro­ce­dures such as hip, knee and shoul­der re­place­ments and spinal fu­sion will re­quire the high­est and pre­sum­ably most ex­pen­sive level of “gold” cover, de­spite many of them now be­ing avail­able to peo­ple hold­ing lower lev­els of cover.

The Med­i­cal Tech­nol­ogy As­so­ci­a­tion of Aus­tralia chief ex­ec­u­tive, Ian Burgess, said he had ex­pressed con­cern to the gov­ern­ment that in­sur­ers would choose to no longer of­fer cer­tain ser­vices – such as spinal fu­sion, joint re­place­ment, chronic pain or cataracts – on the lower cat­e­gories.

“This could lead to a fur­ther re­duc­tion in the num­ber of peo­ple with pri­vate health in­sur­ance or a re­duc­tion in the num­ber of peo­ple cov­ered by ef­fec­tive health in­sur­ance that prop­erly cov­ers them for their needs,” he said.

“In ei­ther case there is a risk that fur­ther bur­den would be placed upon pub­lic health ser­vices for elec­tive surgery and in­creased wait­ing lists for com­mon pro­ce­dures such as joint re­place­ments.”

Pho­to­graph: Dar­ren Green­wood/De­sign Pics I

Med­i­cal groups fear hip re­place­ments will re­quire pri­vate health in­sur­ance ‘gold’ cover.

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