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Are you paying $2,000 too much for health cover?

EXCLUSIVE: A massive health fund rip off means families could be paying up to $1,900 a year more than they need to for top cover.

Under rule changes that came into effect on April 1, health fund policies have been reclassified into Gold, Silver, Bronze and Basic groupings.

Gold policies have to cover all 38 clinical categories of care, so in theory they should all cost the same.

However, an analysis by insurance broker iSelect has found huge variation in premiums with the cheapest cover offered by the Teacher's Health fund being $1,900 a year lower in cost than the most expensive product.

Health fund NIB which charges $6,386 a year for Gold cover came out as the most expensive fund in iSelect's comparison of the top 10 health funds by market share.


iSelect Chairman Chris Knoblanche. Picture: Stuart McEvoy
iSelect Chairman Chris Knoblanche. Picture: Stuart McEvoy


The Teacher's Health fund is a restricted fund, only open to current and former teachers, university and college lecturers, teachers' aides and support and administration staff from public, private and independent education institutions and their families.

This could help keep its premiums lower because it draws its 330,000 members from a healthier working population.

Teacher's Health Fund CEO Brad Joyce said the efficiency of its operations helped contribute to lower premiums.

"As a not-for-profit 'for member' health fund, we do not have the pressure to return dividends to shareholders," he said.

"Rather at Teachers Health we can instead focus on reinvesting into our membership in the form of affordable pricing. Teachers Health also has one of the lowest overhead expense ratios in the industry," he said.

However, NIB's Gold cover was still $1,429 more expensive than Medibank's which is available to all Australians.

Premiums for Gold cover rose by more than twice the 3.25 per cent average price hike on April 1.

Medibank increased the price of its top cover policy in NSW by 7.5 per cent or $259 per year, Bupa's top cover is up by over 7 per cent in NSW, NIB's top cover rose by 6.2 per cent.

iSelect's Laura Crowden said "any difference in price essentially comes down to market forces and highlights the importance of customers shopping around for better value," she said.


Premiums for Gold health cover rose by twice the average on April 1. Picture iStock
Premiums for Gold health cover rose by twice the average on April 1. Picture iStock

Private Healthcare Australia chief Rachel David said premiums for Gold cover were affected by which hospitals a health fund had under contract and how many doctors were included in their gap cover deals.

NIB's Managing Director Mark Fitzgibbon said his funds products "are designed and priced to provide the right level of benefits for our members"

"Gold Top Hospital is our most comprehensive full service product and provides members complete peace of mind, knowing if something goes wrong they are covered," he said.

Medibank's Chief Customer Officer David Koczkar said the fund was keeping premiums as low as possible by focusing on our costs by "cutting $60 million out of our own expenses over three years which helps to keep products as competitively priced as possible."

The revelations come as health funds and the medical profession meet on Thursday to thrash out the rules around Health Minister Greg Hunt's new website that will show the fees doctors charge in a bid to minimise the gap fees faced by four in ten people who use their health cover.

Obstetricians are signalling they will refuse to participate in the voluntary scheme.

Consumers Health Forum chief Leanne Wells said the dramatic premium differences "underline the need for consumers to shop around when choosing their insurance".

"It is difficult to know whether the high end premiums are justifiable, given the different deals funds do with doctors and hospitals," she said.

"That the variation in premiums is so stark for standard gold cover highlights the complexity of health insurance and the challenges consumers face in trying to make the best choice."

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