Major changes to private health insurance - what does it mean for you?
What has happened?
In 2015, the Health Minister Susan Ley announced multiple independent reviews into the health insurance system in Australia to alleviate the price pressures Australians are facing every year and to remove leakage from health insurance practices.
Several review findings will be released today by the current Health Minister Greg Hunt, with 14 positive changes to be implemented to improve the industry and make the cost of insurance achievable for more Australians.
What are the changes?
Some of these changes include:
- Prosthetics review - reducing the differential between public and private charges for prostheses, removing over a billion dollars from health insurance claims over 4 years,
- The removal of ‘junk’ policies - reducing take-up of policies with little value (only used to avoid Medicare Levy Surcharge or the Lifetime Health Cover loading),
- Simplify private health insurance (PHI) categories - policies will be required to be categorised into Gold, Silver, Bronze or Basic to make it easier for retail customers to compare covers,
- Australian Government Rebates - The government is looking at reducing the burden of taxpayer funded rebates by banning insurers including natural therapies that do not have clinically proven health benefits,
- Out of Pocket charges - greater transparency into charges by doctors and travel/accommodation inclusions in policies for rural residents,
- Insurance premium reductions for younger policy holders - discounts for 18-25 year olds of up to 10% and phased out up to age 40 will make insurance more attractive to younger Australians,
- Mental health reform - patients with lower level hospital cover may immediately upgrade their policy to full cover when entering a hospital with a mental illness,
- Reduce family premiums - by making available higher excess charges for hospital admissions by up to 50% ($750 for singles up from $500 and $1500 for families up from $1000),
- Review of arrangements for patients using insurance in public hospitals, including the emergency department.
How do the changes affect me?
The above changes to the health insurance landscape will undoubtedly offer Australians some respite from the never-ending above-inflation annual premium increases and allow more transparency in products that have become increasingly difficult to compare.
Much of the leakage in the health system that has led to premium pressures is out of the control of policy holders, and to a large extent the insurers. These reforms will also allow insurers to take stock and reset their product portfolios to reflect the changes and reduce the burden of admitting patients in emergency as private patients (independent of needs) and paying up to 5 times the cost of a prosthetic or medical device in a private hospital as compared to the identical kit in a public facility.
How Aon can help
At Aon, our expert broking teams work closely with key insurers to continually develop solutions that resonate in the market. Our People Risk team work with clients to develop best in class benefits for all employees to gain greater value from their investments, along with ‘ease of use’ when it comes to the often misunderstood world of Private Health Insurance.
For more information about PHI for corporates, please contact Damien Kelly or your Aon representative today.