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AMA acts to hold insurers to account

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This time last year I wrote about the AMA’s position on various private health insurance issues in response to increasingly aggressive activities by insurers that were affecting patient care.

In late 2014, the privatisation of Medibank Private saw the market share of for-profit health insurers rise from 34 per cent to more than 63 per cent of health fund members. This has been a game-changer. We now have an industry dominated by the interests of for-profit health insurers rather than not-for-profits, with a subsequent shift of focus from providing patient benefits to increasing profits for shareholders. Medibank announced higher than expected profits this year.

The effects of this are becoming clear. In the second half of 2015, the Australian Competition and Consumer Commission issued a damning report on the quality and accuracy of information provided by private health insurers about their products, and the impact this was having on the ability of consumers to make informed decisions about which policy best suited their needs, and to understand exactly what they were covered for.

The AMA is working to help address this problem. The Medical Practice Committee is developing the AMA’s first annual report card on private health insurance, which will provide consumers with clear, simple information about how health insurance works and encourage them to examine their policy more carefully.

The report card will include a table of all primary products offered by private health insurers to highlight those that have exclusions or restrictions. Consumers can check whether a particular policy provides ‘public hospital only’ cover and should therefore be considered junk.

The report card will also provide information on the level of benefits paid by different insurers for a sample of common procedures. Insurers vary significantly in how much they pay for the same procedure, and therefore how likely it is consumers will face out-of-pocket costs. The report card will also help doctors identify which are the better paying insurers when considering gap arrangements. The cost of a product’s premium is not necessarily a good indicator of how well it will cover health costs.

The regulation of premium increases is one of many regulatory controls over private health insurers that is currently being examined by a review of the industry commissioned by Health Minister Sussan Ley.

The review is examining all aspects of government regulation of private health insurance, including issues such as: expanding its scope to primary health care; relaxing community rating principles; and shifting government subsidies to private hospitals payments for patient care rather than via health insurance premium rebates.

In its submission to the review, which can be viewed at submission/ama-submission-private-health-insurance-consultations-2015-16, the AMA reaffirmed its support for community rating principles, in order to maintain the balance between the public and private hospital sectors. We would strongly oppose any moves to set premiums according to an individual’s risk of ill health.

The AMA also called for junk policies – those with significant exclusions or that provide cover only for treatment in public hospitals – to be banned. Private health insurance policies should meet consumer expectations by covering them for those procedures most likely to be needed, and by providing them with a level of choice about the timing of their care and their medical practitioner.

It will be interesting to see whether the Government will announce any new policies on private health insurance as a result of this review, prior to the election later this year.

I encourage you to email any views or suggestions regarding these issues to