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Let’s be clear eyed while moving forward on private health insurance

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BY ASSOCIATE PROFESSOR JULIAN RAIT, CHAIR, COUNCIL OF PRIVATE SPECIALIST PRACTICE

On October 11, Health Minister Greg Hunt announced the final rules that support the new private health insurance clinical categories and the Gold, Silver, Bronze and Basic classification system. 

CPSP and the AMA have called on these reforms to deliver simplified, better value private health insurance products for consumers. A system that offers more comprehensive coverage, with clear definitions, and less caveats and carve outs. Will the new system deliver total clarity and transparency? Not quite, but it is going to be a lot simpler for consumers than trying to navigate through the current 70,000 policy offerings.

The AMA has always supported, two key aspects of these reforms:

  1. Clarity about what medical conditions are covered in each tier of benefits; and
  2. The use of standard clinical categories across all private health policies. 

The new classification system categorises existing policies into easier to understand tiers. These tiers, in combination with new Private Health Information Statement (which includes mandatory information about what each policy covers), should make it easier for people to compare policies, to shop around and actually see what they are covered for.  

This should enable consumers to know that when they book in for a procedure they are covered now and not have to wait an additional 12 months or try the public system. 

The tiers outline minimum requirements, but they still allow insurers to add additional cover. The legislation clarifies that insurers can move people onto new products, closing old products, but introduces new protections about warning and information for consumers. Additionally, the Minister is on the record stating that “importantly consumers will not be forced to change their policy cover if they are happy with it”. 

There are also some more hidden benefits that will come in with the new system.  

  1. That the system provides full mandatory cover for the medical conditions in each tier; partial cover is not permitted (except in Basic cover and for Psychiatry, Rehabilitation, and Palliative Care – except in Gold cover where there are no exclusions allowed at all); 
  2. The inclusion of gynaecology, breast surgery, cancer treatment, and breast reconstruction in bronze tier products; 
  3. That a clinical category covers the entire episode of hospital care for the investigation or treatment;  
  4. That an episode of hospital treatment covers the miscellaneous services allied to the primary service; and 
  5. Patients with limited cover for psychiatric care can upgrade their cover (once) to access higher benefits for in-hospital treatment without serving a waiting period.  

While these look obvious, they haven’t always been included in policies. From next year they will be. 

The Minister has called for an April 1, 2019 commencement to coincide with the annual announcement of new premiums. However, as with most major changes, not all groups can adapt as quickly as others. So, while the reforms start next year, insurers have a further 12 months to ensure that each of their products is compliant and to move people onto new products if required. This is not ideal, but the transition for the smaller insurers is likely to be very resource intensive. The Minister has stated that his expectation is that the great majority of policies will be ready to go by April 1 next year. He has also stated that these reforms will have an overall neutral to -0.3 per cent impact on premiums compared with current policy settings. 

But we also need to be clear eyed here. This will not solve the wider issue of how to bridge the ongoing premium increases in the 4-5 per cent range, and wages growth at 2 per cent range. That fundamental paradox to a long-term, sustainable private health insurance system remains. These reforms will not address the concerns around private health insurer behavior, nor will they address the variation in rebates. These reforms are about making life a little easier for our patients, and our practices. But the AMA will need the support of all our members going forward – for clearly, the bigger problem is yet to be addressed. 

 

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