Private Health Insurance is Unwell

Article published 25 July 2018

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If you are one of the lucky ones who can still afford private health insurance, you may have found that your policy didn’t quite cover what you thought it covered.

According to the ACCC, the federal consumer watchdog, you shouldn’t blame yourself for your confusion about the insurer you’re with. Private health insurance policies are so complex only your insurer understands them.

This leads to unexpected out-of-pocket costs when you claim.

The ACCC says that this is what’s behind increased complaints and people abandoning their hospital policies.

In response to steep premium increases, there are also those who shift to lower-cost policies with greater exclusions or a higher excess.

Private health insurance policies are written in such a way that you won’t understand them. When you claim you are likely to get a nasty surprise because you’re not covered for that particular complaint.

In addition, policies are expensive and getting even more expensive.

What is the solution?

The Government is pinning its hopes on forcing insurers to provide reliable and transparent information about private health insurance policies.

Insurers will have to be dragged kicking and screaming to do this, though, because the current arrangements work so well for them.

The Private Health Insurance Ombudsman will also be given additional funding to enable it to widely promote its website and comparison service.

About 55 per cent of Australians paid private health insurance premiums of around $23.1 billion in 2016-17, an increase of $1 billion from 2015-16.

Complaints to the Private Health Insurance Ombudsman (PHIO) increased by 30 per cent, continuing a trend of increasing complaints, the number of which have risen for the fourth consecutive year. The benefits paid by insurers to consumers continued to receive the highest level of complaints.

CPSA’s view is that, if Medicare is strengthened, then people wouldn’t need a private health insurance policy.

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