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Private health insurance reforms – moving ahead

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In October last year, Health Minister Greg Hunt announced that the Government would embark on a package of reforms aimed at making private health insurance simpler and more affordable for Australians.  

Private health insurance is one of the most complex forms of insurance and the current complexity of product offerings has led many consumers to report that they do not understand what they are covered for. These reforms aim to simplify private health insurance hospital cover by creating easily understood tiers of cover. There will be four tiers of hospital products Gold, Silver, Bronze and Basic. These new private health insurance products will take effect from April 1, 2019.

When announced, the AMA President welcomed the reforms as a long overdue opportunity to bring much-needed transparency, clarity, and affordability to the private health sector. However, the AMA also noted that the challenge ahead was to clearly define and describe the insurance products on offer – to deliver meaningful and consistent levels of cover in each category.

The reform package has built on the work of the Private Health Ministerial Advisory Committee, which was established to examine all aspects of private health insurance and provide government with advice on reforms. This committee met extensively and set up several working groups to look at specific issues. The AMA has been represented continuously throughout this process. An ad hoc group of members has been working to provide the AMA representatives with advice and support.

As part of this process the AMA recently provided a submission to the Health Department concerning the draft standard clinical definitions that support the new private health insurance categories. More recently, the Government has introduced the legislation required to support the package of reforms into parliament. The legislative package has now been referred to a Senate Committee Inquiry, which is expected to report in mid-August.

On Sunday July 15, the Minister announced the Gold, Silver and Bronze categories again without much further information. However, the next day the Health Department released the draft rules (or subordinate legislation/regulations) that will support the package of reforms. 

Under these new rules, the proposed Gold, Silver and Bronze policies will not contain restrictions or carve outs for included clinical treatments (except hospital psychiatric care, rehabilitation and palliative care). According to Government modelling currently about 25 per cent of people with private hospital insurance purchase cover have restrictions applied to a clinical category other than hospital psychiatric care, rehabilitation and palliative care. In the new system, only the new Basic category can have restrictions (outside hospital psychiatric care, rehabilitation and palliative care), and even then, it must be clearly marked as having a restriction.

The AMA Secretariat is now working with the other Colleges, Associations and Societies to provide the Government with comprehensive advice on the proposed rules, including the critical issue of clinical definitions and MBS item coverage under these definitions.

Extract of a letter to members from AMA President Dr Tony Bartone.