13th October, 2017 | 4 minutes
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Turnbull Government shakes up the Private Health Insurance system

by Laura Crowden
iSelect Corporate Affairs Manager

Breaking news: Today, the Australian Government has formally announced changes to private health insurance. Policies will soon have simple classifications so choosing one may be easier for you. 

The changes will also see discounted premiums for under 30s and will make private health insurance more attractive to younger Australians and help lower premiums.

The Government’s aim to is encourage younger Australians to take up private health insurance by allowing health insurers to discount hospital insurance premiums for 18 to 29 year olds by up to 10 per cent. The discount will then phase out after people turn 40.

iSelect, Australia’s leading private health insurance broker, has welcomed the Federal Government’s decision to categorise policies into gold, silver, bronze and basic, and also introduce discounted premiums for younger customers.

Policies will soon have simple classifications so choosing one will be easier for you

Regardless of your age, the introduction of gold, silver, bronze and basic policies may make it easier to understand health insurance policies. Insurers will be required to categorise their products as gold/silver/bronze/basic, and use standardised definitions for treatments to make it clear what is and isn’t covered in their policies.

Scott Wilson, iSelect Managing Director & CEO, said these changes would reduce cost of living pressures on Australian families and help to make a complex purchase decision much simpler.

“Around one in five private health insurance policies is sold through iSelect and so we know from speaking directly to our customers how hard it is for Australians to compare thousands of available options,” Mr Wilson said.

“At iSelect we’re all about making it easier for customers to choose the right policy.  The introduction of gold, silver, bronze and basic policies will make it much easier for customers to make an informed decision as to which policy is best suited to their individual needs and budget.”

Under the changes announced by Federal Health Minister Greg Hunt, gold policies will have no exclusions, silver policies will also cover everything but customers will have to pay an excess with hospital admissions while bronze policies will have exclusions for things such as pregnancy, mental health or joint replacements.  Basic policies will only cover treatment as a private patient in a public hospital.

Discounts for under 30s

Mr Wilson also applauded the Government’s decision to allow insurers to offer a discount to younger customers. Australians aged under 30 will get a two per cent discount on their premium for each year they hold cover, up to a maximum of 10 per cent.

“Over the past few years, the industry has seen a sharp decline in the number of customers aged under thirty taking out private health insurance which is particularly concerning given the insurers rely on younger, healthier customers who are less likely to claim to help keep costs down.”

Mr Wilson said the Government’s decision to introduce a discount for younger customers would hopefully stem the tide of young people turning their backs on private health cover.

“Hopefully the introduction of a 10 per cent discount will encourage more young people to take out cover earlier in life, and maintain it, which will reduce the pressure on premiums and make private cover more affordable for all Australians.”

Changes to private health insurance

Also under the expected changes, the cost of prostheses used for hip and knee replacements will be dramatically reduced and is expected to result in lower premium rises over the coming years.

Private health insurance premiums have risen by more than fifty per cent on average since 2010, which is well above the rate of inflation.

“We know from speaking to our customers that Australians still really value the peace of mind they get from private health insurance but are struggling to keep up with rising premiums,” Mr Wilson said.

“The decision to cut prosthesis prices to help bring down premiums will be a welcomed relief to many Australian families grappling with the rising cost of living.”

What does this mean for you?

Federal Health Minister Greg Hunt said that the changes should make private health insurance simpler and more affordable for Australians. “We know that every dollar matters to Australian families and these reforms will get better value for families and make policies easier to understand.”

Included in today’s announcement were:

  • Discounts for under 30s
  • Gold, Silver, Bronze & Basic category ratings
  • Prostheses reform & reduction in premiums
  • Mental health

With many current policies having low benefits for mental health conditions, this announcement includes proposed changes so that privately insured patients entering a hospital with a mental illness will now be offered an immediate upgrade of their policy to fully cover mental health. This means there will be no waiting period. The “benefit limitation periods” sometimes applied to mental health cover will also be removed.

  • Natural therapies

Health insurers no longer have to pay for members to use a range of natural therapies including yoga, homeopathy, kinesiology, pilates, rolfing and tai chi. The Chief Medical Officer recently conducted a review and found there was no clear evidence of the efficacy of these services. Excluding them from cover would ensure taxpayers are not directed to treatments lacking evidence, helping to take pressure off health premiums.

  • Changes to excesses

With this announcement, Aussies will be able to choose higher excesses to lower the premiums they pay. The maximum permitted excesses for private hospital insurance will rise from $500 to $750 for singles and from $1000 to $1500 for couples and families. The new maximum excesses will come into effect in April 2019 however it is important to note that no customers will be required to move to a product with a higher excess.

At iSelect, we get that many people can find private health insurance confusing. We aim to ensure that you are on the right health insurance policy.

Compare health insurance

With the rising cost of living, it could really pay to get an expert iSelect opinion. Give us a call on 13 19 20 to talk through how the recent changes may affect you and ensure your hospital and extras policy is tailored to your lifestyle.

Source: The Hon. Greg Hunt MP, Minister for Health Media Release, 13 October 2017 – Major reforms to make private health insurance simpler and more affordable

iSelect does not compare all products in the market. Not all products are available at all times. Any advice provided in this content is of a general nature and does not take into account your objectives, financial situation or needs. You need to consider the appropriateness of any information or general advice we give you, having regard to your personal situation, before acting on our advice or purchasing any product.

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