New tiered system to better inform consumers about coverage and benchmarks

New tiered system to better inform consumers about coverage and benchmarks | Insurance Business Australia

New tiered system to better inform consumers about coverage and benchmarks

The federal government has introduced a new system that will help some 13 million Australian consumers figure out exactly what their health insurance policies cover.

Health Minister Greg Hunt said the new policy categories – gold, silver, bronze, and basic – would give consumers more information about their coverage, and set benchmarks for the minimum services insurers would be offering under each policy.

Hunt said the tiered system, which will come into effect in April, means “we take the existing policies, no change in price, no change in coverage, but we make it simpler so everybody can see in one page exactly what is in place," ABC reported.

The changes to the system will also lead to more cancer treatments being covered by private health, particularly for women with breast and ovarian cancer.

"There's been a disparity in the past between coverage of men and women for different types of cancers, so it's another important day for cancer treatment for women," Hunt said.

Catherine King, shadow health minister, welcomed the move to increase consumer knowledge, but argued the government was not doing enough to eliminate low-cost policies that provided little coverage.

"What Labor has said is that we will remove the private health insurance rebate from those junk policies, in particular those ones that only offer private health insurance cover in public hospitals," King told ABC. "We think that that is not warranted when you've got a number of consumers using that product, frankly, as an effort to minimise taxation as opposed to actually access private health insurance. What we've seen increasingly under this government is more and more complexity in the sorts of products that are around, more exclusions, more excess payments, more gap payments in those products, and less value for money for consumers."

The coalition said Labor's approach to low-cost policies, which could be classified as “basic” under the new system, would do more harm than good.

"I know that the ALP wants to effectively knock out the basic categories, but that would lead to a 16% price hike in private health insurance, which would drive hundreds of thousands, if not millions out of private health insurance," Hunt said.

Private Healthcare Australia (PHA), Australian private health insurance industry's peak representative body, welcomed the reform and said it would inform consumers of the changes early next year.

The organisation also defended cheaper policies. 

"The basic and bronze tiers also provide affordable entry-level products for younger, healthier people who frequently go on to upgrade as they get older and their life circumstances change," Rachel David, PHA chief executive, told the news agency. "The key issue with the lower cost tiers is effective communication to consumers about what is and isn't covered so they know what they are buying. The new classification and information system addresses this.”


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