Health policies will now be standardised as Gold, Silver, Bronze and Basic. Picture iStock
Health policies will now be standardised as Gold, Silver, Bronze and Basic. Picture iStock

The biggest losers in health fund reforms

HEALTH funds will be able to close down your health fund policy and shift you to a new policy under major reforms approved by parliament that will take effect next April.

And some families will have to pay the first $1,500 of their private hospital bills before their insurer will provide a rebate under changes to control annual premium rises by allowing funds to charge a higher excess payment when you use your cover.

Young people aged under 30 will be eligible for discounts on health fund premiums of up to 10 per cent under other changes designed to turn around the exodus from private health insurance fuelled by successive premium rises more than twice the inflation rate.

The biggest reforms to private health insurance in almost two decades will also standardise all policies into Gold, Silver, Bronze and Basic.

Health fund reforms will standardise policies. Picture supplied
Health fund reforms will standardise policies. Picture supplied

 

News Corp revealed last week that major fears have been raised about these new standard policies because health funds will only have to cover hip and knee replacements, the most common procedures done in private hospitals, in the most expensive level of cover, Gold.

Silver and Bronze policy holders wanting such cover will need to buy add-ons to their basic policy.

Pain Australia and spine surgeons and Opposition health spokeswoman Catherine King have expressed concerns that key chronic pain and spine treatments will also only be covered in higher levels of cover.

Despite claiming the new system will simplify health cover, the government's four tiers could lead to innumerable policy combinations when add-ons are taken into account.

Some health fund members may find their health insurance product simply disappears because the reforms also allow insurers to terminate existing health fund products and to transfer all people insured under that product to new policies.

The rule is designed to reduce the 40,000 different health fund policies on the market and insurers claim it was not driven by them but by consumer groups and the government's private health reform advisory committee.

The insurer will have to inform the person who is being transferred from one policy to another and they will not have to re-serve waiting periods when moving to a new policy.

A spokesman for Health Minister Greg Hunt says the Morrison Government is making private health insurance easier to understand and more affordable.

The reforms will not increase costs to consumers, he says.

"The new changes will explain to consumers exactly what is covered in a policy and what is not in the form of one clear page of information.

The reforms allow funds to charge higher excesses to control annual premium rises. Picture: iStock
The reforms allow funds to charge higher excesses to control annual premium rises. Picture: iStock

The rules mandate minimum standards for product tiers and "also ensure that private health insurers will continue to be able to offer additional procedures in basic plus (+), bronze plus (+) and silver plus (+) tiers," he said.

Private Healthcare Australia Chief Executive, Dr Rachel David said the PHI reform package would "improve transparency in private health, and make it easier for consumers to choose and use their health insurance".

Last year's average premium increase of 3.95 per cent was the lowest in 17 years and the introduction of a discount to attract young people into health funds will help put private health cover in the reach of younger people, she said.

The introduction of standard clinical terminology under the reforms means for the first time consumers can compare 'apples with apples' and better navigate the system at the point of purchasing a health insurance policy, she said.



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