FAQs: private health insurance changes
Bupa answers some frequently asked questions to help you understand the private health insurance reforms, announced today by Federal Health Minister Greg Hunt.
Q: What are the changes for young people with the Health Cover Discount?
From 1 April 2019, health funds will be able to offer discounted private hospital cover to people aged 18 to 29.
Heath funds are currently prevented from doing so by legislation.
Health funds will be able to offer premium discounts on hospital cover of up to two per cent for each year that a person is aged under 30, to a maximum of 10 per cent for 18 to 25 year olds.
These discounts will be gradually phased out once a policy holder turns 40.
A community rated health insurance system works best when you have broad participation across all age groups, not just older or less healthy people. Any measure that encourages young people to join is therefore very important.
Bupa welcomes the Government’s decision to approve a Health Cover discount for young people, as this should help address falling membership and help keep overall premiums lower.
Q: What are the changes to prostheses pricing?
The Minister has announced a total of $300 million in prostheses list price reductions, to take place over the next two years.
Bupa has promised all savings made by reducing these inflated prostheses list benefits will be passed on to customers in the next premium rounds in April 2018 and April 2019.
This announcement is in addition to the commitment by the previous Minister Ley in 2016 for an $86 million reduction in the prostheses list. Bupa passed every cent of savings from that announcement to our customers during the 2017 premium process.
The Prostheses List has locked in highly inflated prostheses benefit levels in Australia’s private health market, resulting in overpricing in the order of at least $800 million per year for privately insured patents.
Although the proposed benefit reductions go some way towards correcting these disparities, it is vital that the prostheses price list continues to be reformed so that Australian consumers pay a fair price for medical devices.
Q: How are Gold/Silver/Bronze/Basic policy levels going to work?
Bupa recognises that it’s really important that consumers know what they are buying, and that their policy of choice is not only affordable, but meets their health and life stage needs.
The Minister announced that there will be four new categories of hospital products – Gold, Silver, Bronze and Basic – and three categories of general treatment (extras) products – Gold, Silver and Bronze.
These product categorisation arrangements will start from 1 April 2019.
For each category, there will be specified minimum levels of coverage so that customers can compare more easily and will know, for example, that two bronze products offer the same type of coverage.
Bupa welcomes any move to reduce complexity and simplify consumer choice.
Q: What is the mental health safety net, and how will it work?
In recognition of the fact many people find it difficult to assess their own risk of developing a mental health problem, all health funds will introduce a mental health safety net for people with low-cost policies who are unexpectedly admitted to hospital for a serious mental health condition.
Even if mental health care is not in their current policy, if a customer is hospitalised they will have a one-off opportunity to upgrade their cover, and have their hospital stay fully covered without a waiting period on lower benefits.
Policy holders will only be able use this exemption from the existing two month waiting period once.
This change will take place from 1 April 2018.
Q: What changes are happening to the private health website?
The Minister has announced that the Private Health Insurance Ombudsman (PHIO) website privatehealth.gov.au will be redeveloped to improve the assistance it provides consumers to choose a private health insurance product that best meets their needs.
Bupa has previously advocated for changes to this website, in order to make it a true independent comparison tool for consumers.
Many customers visit comparator sites to compare two products against one other. However, customers using comparator sites should know that they don’t always cover all the health options they may require, and often don’t know the products in a great level of detail.
Furthermore, comparators claim as much as 40 per cent of the first year’s premium as their commission for informing people of their choice. This fee doesn't go to buying health services, it must be absorbed, and inevitably leads to higher premiums. This causes further pressure on premiums each year.
Currently, we believe the reason consumers visit comparator sites is because privatehealth.gov.au is not as user friendly as is could be.
Enhancing the privatehealth.gov.au website should help mitigate many of the issues with comparator sites.
Q: I live in a rural area, how will the new rural health product work?
The Minister has announced the introduction of a “rural health product” allowing health funds to offer travel and accommodation benefits under hospital cover.
These arrangements are to take effect from 1 April 2019.
Q: What is the change to excess levels?
From 1 April 2019, there will be a lift on the cap for excess levels available, from $500/$1000 to $750/$1500 (although it won’t be mandatory for all funds to offer this type of product).
This will give consumers the opportunity to choose higher excesses to lower their premiums.
Q: What is changing with natural therapies?
From 1 April 2019, cover for the following natural therapies will be removed from private health insurance products: Alexander technique, aromatherapy, Bowen therapy, Buteyko, Feldenkrais, herbalism, homeopathy, iridology, kinesiology, naturopathy, Pilates, reflexology, Rolfing, shiatsu, tai chi, and yoga.
Q: Is the Minister doing anything about private patients who are pressured to use their cover in public hospital?
The Minister has said that the issue of privately insured patients in public hospitals will be considered in the broader context of his negotiations with States and Territories on the National Health Agreement.
Bupa will continue to advocate on this issue for greater scrutiny of, and transparency regarding, the information provided to members to help them make decisions to either elect to be a private patient or exercise their right to be a public patient.
WATCH: Dr Dwayne Crombie, Bupa's Managing Director of Health Insurance, responds to the private health insurance reform announcement here, and makes a promise to all customers.