Medibank court decision cold comfort for consumers
The Federal Court’s dismissal of proceedings against Medibank Private underlines the need for greater clarity and transparency in the private health insurance market, the Consumers Health Forum said today.
The Court has dismissed the case brought by the Australian Competition and Consumer Commission against Medibank in relation to its alleged failure to notify members of Medibank and its subsidiary, ahm, of its decision to limit benefits for hospital pathology and radiology. That was despite representing that it would advise members of changes, the ACCC said.
The court dismissed the charge of misleading or deceptive representations and unconscionable conduct against Medibank.
“When consumers take out health insurance they are buying “peace of mind”, but this judgement indicates that they need to regularly examine and re-examine their policy’s fine print to be assured of exactly what their health funds are covering,” the CEO of the Consumers Health Forum, Leanne Wells, said.
“The 80-page judgement provides a detailed legal assessment of the technicalities of the ACCC case and Medibank’s response that, for many consumers, will serve to demonstrate the complexity of health insurance policies and the difficulties consumers face in establishing what’s included, and what isn’t.
“Families are paying out $4,000 a year or more for health insurance, often reluctantly, because of worries about public hospital waiting times and because of the regulatory and tax penalties if they don’t.
“The growing complexity of health insurance and the difficulties people face as they try to weigh up the value of the different products and keep on top of inclusions and exclusion changes, places an unfair demand on consumers.
“It is a product where people should easily be able to make an informed choice. The Consumers Health Forum has called for significant reforms to health insurance including requirements for policies to offer value, certainty and transparency, or lose eligibility to the health insurance rebate.
“We also urge the Government to institute a more robust public benefit test to ensure the community is receiving benefit from the high level of government investment in health insurance, and a Productivity Commission inquiry into the benefit of government involvement in health insurance,” Ms Wells said.
The ACCC-Medibank case raises a range of points that CHF believes the Federal Government needs to act on. They include:
- The Private Health Insurance Act needs to be amended to define more clearly what is meant by a ‘reasonable time before the changes takes effect’ in the case of a detrimental inclusion change. Currently this ambiguity favours insurers, not consumers.
- Changes should also be made to define the mode through which consumers are provided with the Standard Information Sheet (SIS).
- The ruling notes that the term ‘cover’ should not be taken to mean ‘indemnify’. What remains unclear is what terms insurers do, or should be using, to make consumers aware of the difference between ‘partial cover’ and ‘complete cover’.
- The ACCC has contended that the current format of the SIS ‘provides the barest summary of a policy’s features’ and members of the Government review into health insurance have discussed reforms to change the administration of the SIS to allow ’insurers to provide any other information to consumers in any format and channel the consumer chooses’.
- While Medibank technically makes the information to consumers available, CHF argues that insurers need to make the information more obvious.