Further to the Australian Government’s review of private health insurance, the Australian Medical Association (AMA) has stated that private health insurance should be easier to understand for those wanting to take out a policy. The AMA is also concerned that premiums are being increased to satisfy shareholders while at the same time limiting services and choice provided to patients.
In response to a Federal parliamentary committee on the value and affordability of private health insurance, the President of the AMA issued a statement that insurers should not interfere with the relationship between doctor and patient or create barriers for patients accessing care.
Meanwhile, younger Australians are sceptical of the government’s change to allow insurance providers to offer discounts to encourage those under 30 to take out private health insurance. The quality of care in Australia’s public health care system is believed to be as good as that in the private health care system and young people do not feel the discount is sufficient incentive for them to take out private health insurance, particularly at a time when they are paying off education debts and saving to buy a home.
In general, there is lack of public understanding around private health insurance with a Choice survey finding that 44 percent of health insurance policy holders believed policy comparison was difficult, partly due to technical terminology and inconsistency. The survey also found that many people who have private health insurance maintained policies that were unsuitable for their changing needs because they didn’t fully understand what was covered. Both Choice and the AMA have called on the government to make private health insurance policies easier for Australians to understand.
Lifetime Health Cover Loading
Of particular concern are people who are taking out poor-value, low-cover insurance to avoid paying Lifetime Health Cover (LHC), an Australian Government initiative which aims to encourage people to take out cover before the age of 30 and maintain it. LHC attracts a two percent loading every year after the age of 30 to a maximum of 70 percent. This means that, for example, someone who first takes out hospital cover at the age of 45 will attract a 30 percent loading on top of their premium. An analysis by consumer group Choice found that 13 percent of available policies did not provide cover for heart attack, cancer or stroke and determined that people with such policies may financially have been better off relying on the public health system and paying the LHC penalty anyway.
Those born before 1 July 1934 are exempt from LHC and migrants to Australia aged over 30 have until the first anniversary of their full Medicare registration to take out private hospital cover before incurring Lifetime Health Cover loading.