Health funds’ poor practices show need for reform

“Poor practices” by some health funds are exposing consumers to bill shock and inadequate cover, the Australian Competition and Consumer Commission has found in a new report.

“The ACCC report on health insurance to the Senate indicates that the increasing number of changes health funds are making to their policies are often poorly communicated with unfortunate consequences for their members,” the CEO of the Consumers Health Forum, Leanne Wells, said.

“Not only do we have confused and frustrated consumers, at worst the consequence of bill shock and high-premium low-value cover is reduced access to health care.

“The report underlines the need for simpler, more certain health insurance policies that the Consumers Health Forum has long called for.

“The ACCC’s findings are a timely reminder for the Health Minister’s review of health insurance.  The Private Health Ministerial Advisory Committee is examining issues such as the provision of information to health fund members.

“It is a concern that the dynamics of health insurance are tending to worsen the causes of bill shock and failure of health funds effectively to alert their members of changes to coverage that can leave patients with high out of pocket expenses they were not expecting.

“The ACCC says that evidence suggests that ‘benefit changes are widespread and increasing over time, and that inadequate notification can have a significant impact on consumers’.

“The ACCC has already instituted proceedings against one fund for allegedly engaging in misleading conduct and it says it is currently investigating the conduct of other health insurers concerning their policy offerings.

Ms Wells said that despite years of consumer complaints and frustration some health funds were still treating their members poorly, some not notifying their members of changes, or giving low prominence or unclear and misleading messages about changes.

“Complexity in health insurance continues to increase, driven by increasing number of policies and the rise of non-comprehensive policies, particularly those with exclusions, restrictions and excesses, the ACCC says.

“It has highlighted recommendations it has received on how insurers could improve information to consumers which the Consumers Health Forum supports and which should be considered by the ministerial advisory committee.

These include:

  • Upfront disclosure to consumers such as advanced notice of changes and option for members to specify a preferred communication method
  • Improved industry practice to make it clear when insurers should notify consumers of benefit changes that could pose significant detriment
  • Limiting frequency of benefit changes and standardising when consumers are notified of changes.

“This report is a worrying indication that too many health funds are not listening to their members.  It is clear the funds need to make big improvements to the way they communicate with their members,” Ms Wells said.


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