Call for more proof of private health savings

Consumer advocates have called for more evidence that households will see savings as a result of the federal government’s private health insurance changes
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On Friday, Health Minister Greg Hunt announced changes that would allow insurers to give discounts to young ns on their hospital insurance premiums. This would result in young people saving 2 per cent for every year before they turn 30, capped at 10 per cent. It would be phased out when they turn 40.

Mr Hunt also said private health insurers would save $1 billion over four years because of a deal that would reduce the cost of prostheses. The saving would be passed on to customers.

“Across the board, we hope to save hundreds of dollars over the coming three years – very significant outcomes for people,” he said.

When asked if he could guarantee savings, Mr Hunt told ABC Radio: “These are matters for the private sector, but they have guaranteed that they will pass through every dollar.”

On Friday, Bupa confirmed “every dollar saved will be passed on to customers”. It was joined by other funds, including HCF, Medibank and nib.

But consumer group Choice called for more information about the overhaul, which plans for savings to begin from next year.

“We haven’t seen the detail from the government on this,” Choice spokeswoman Erin Turner said. “We’re hopeful the reforms will benefit consumers, [but] the terms and conditions matter.”

Labor said young people who signed up to an “average” product would save only about 70?? a week.

“There is absolutely no guarantee in this package that there will be a lower private health insurance premium rise in April next year – no guarantee at all,” opposition health spokeswoman Catherine King told reporters in Melbourne.

Fairfax Media understands the government is not able to make specific predictions about how much consumers will save because of differences between policies and individual circumstances. But come next April, when insurers make their routine request to increase premiums, they will have to demonstrate they have passed on savings from the prostheses changes to the n Prudential Regulation Authority.

The health insurance package will also scrap coverage for some natural therapies, such as yoga, aromatherapy, Pilates and tai chi. It will also make it easier for hospital insurance holders to upgrade their cover for mental health services, as well as requiring insurers to categorise their products as gold, silver, bronze or basic to make them easier to understand.

The changes, some of which will need to pass Parliament, were broadly welcomed by the n Medical Association.

“The framework for positive reform of the private health insurance industry is now in place,” AMA president Michael Gannon said, adding the fine detail of the new prostheses arrangements and how pregnancy would be covered needed further work.

The Consumers Health Forum said the package was “likely to deliver not only lower premium increases in the medium-term but hopefully clearer consumer-friendly policies”.

But chief executive Leanne Wells questioned the planned discounts for younger people.

“[This] threatens to undermine the community-rating principle fundamental to n health insurance, which is meant to treat everybody equally regardless of age or health status,” she said. “Health funds, presumably, are hoping that more young members will help subsidise the more costly demands of older members.”

With Gina Cerasiotis

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