Health insurance needs in-depth scrutiny in the public interest
Discounts on health insurance premiums for young people under 30 would erode the community-sharing principles of private cover, further entrenching a two-tiered system, the Consumers Health Forum said today.
In its submission to the Senate Community Affairs Community inquiry into health insurance legislation, the Consumers Health Forum said a Government proposal to allow health funds to introduce age-based discounts would undermine community rating, a fundamental principle of health insurance aimed at ensuring equal premiums regardless of age or health status.
“Such changes to health insurance rules seem designed largely in the health funds’ interests to shore up declining member numbers but go nowhere far enough to respond to the frustration and concerns many consumers have about their health cover,” the CEO of the Consumers Health Forum, Leanne Wells, said.
“The latest statistics showing a significant year-on-year overall fall in health insurance members, particularly the 5.3 per cent drop among those in their 20s, highlights the need for a searching examination of Government assistance and regulation of health insurance.
“While we can understand health funds’ need to recruit younger, healthier members, the discount plan seems destined to be taken up by the minority of young adults who have the means, while the majority who struggle with high costs on modest wages will see little reason to take up insurance.
“It is also likely that those who do join will take out minimum cover and tend to rely on public hospital care if they need it, defeating the objective of taking pressure of public hospitals.
“There are a number of other problems with the proposed amendments to health insurance rules, including the provision that funds are not required to make discounts available for all ages between 18 and 29, or to maintain offering those discounts throughout the life of the policy.
“Consumers will have no assurance as to whether they will continue to have access to a discount as these can be cancelled.
“The lack of certainty for consumers in these and other proposed rule changes that tend to favour the health funds seems to contravene the aim of improving transparency and making insurance simpler for consumers. That is after all meant to be the aim of this reform package.
“If there is a desire to move away from the community rating principle then there should be a full and transparent discussion about that rather than the proposed approach to chip away at the edges.
“Because of this and the complexity of the issues impacting on health fund consumers, the Consumers Health Forum has been calling for a Productivity Commission inquiry into private insurance for some years,” Ms Wells said.