MyCover reform to give consumers a fair go in health insurance
Consumers frustrated by the confusion and uncertainty of choosing the right health insurance policy will gain real buying power under a reform plan proposed by the Consumers Health Forum.
The myCover plan would require health funds to offer simple, standardised hospital policies that enable consumers to compare competing policies and ensure patients and funds have a clear understanding of the cover they signed up for. MyCover would also upgrade the public information portal to a single one-stop shop where consumers could not only compare and choose policies but also access information about actual fees doctors and hospitals charge.
“The key driver of myCover will be that only hospital policies that meet the myCover standards will qualify for the existing rebates on premiums of up to 37.9 per cent, under the plan CHF has put to the Federal Government,” the CEO of the Consumers Health Forum, Leanne Wells, said.
“For general or ancillary cover policies, the Government could consider replacing or limiting the rebates and instead encourage people to self-insure for the costs of private allied health and dental services by means of a health savings account to which government and consumer would contribute,” Ms Well said.
CHF has proposed myCover to give consumers a fair go after a recent survey it conducted confirmed the widespread concerns about the cost and complexity of health insurance. Among the findings of the CHF survey:
- Only half of respondents were confident that they understood what their policy covered
- Only one in four found the process of selecting insurance easy
- More than one in five policy holders reported having a claim denied by their insurer
- Overall satisfaction of respondents with their polices was 38 per cent
“This is a poor result for health insurance which exists on the back of huge government financial and regulatory support. These survey results highlight the need for real action to ensure public policy and public subsidies deliver concrete benefits for consumers,” Ms Wells, said.
“MyCover proposes a simple mechanism, transparent to all, to drive better performance by health funds and health providers, specialists and hospitals. By making payment of the government’s rebate contingent on funds meeting reasonable policy standards, myCover will ensure the rebate is delivering performance benefits to policy holders.
“Making standardised hospital policies easily comparable would not only facilitate consumer choice but also drive real competition and reduce the risk of junk policies receiving the rebate.
“Our survey found that respondents paid out in annual premiums an average $1,935 for singles, $3,955 for couples and $4,337 for families. These are heavy costs when you consider taxpayers are also contributing another $6 billion a year in rebates. The costs to consumers are so high that the worth of the rebate gets lost.
“The performance of health insurers in providing consumer-friendly outcomes should disturb not just policy-holders but also taxpayers. Australian consumers have seen the value of their health insurance policies erode rather than improve despite 15 years of increasing regulation and many billions of dollars in subsidies,” Ms Wells said.
MyCover at a glance
The MyCover plan CHF has recommended to Government includes the following measures:
- Legislation to enforce plain language and financial disclosure standards to overcome information asymmetry between insurers and consumers
- The creation of a suite of nationally standardised (or default), basic private health insurance packages for Hospital Cover (myCover). The features of these packages should be developed jointly with consumers, health insurers and private hospitals and would offer a range of services to fit different stages of the life course;
- Making the Rebate available only for myCover packages, and reinvesting savings back into the public system;
- Limiting the Rebate on general cover to interventions that have a sound evidence base;
- Insurers would be free to offer other (non-rebateable) products;
- Allowing limited coverage for non-hospital services where they had previously been hospital based services, and offering support to insurers who conduct evidence-based disease management and prevention programs;
- Protection of community rating by restructuring the Lifetime Health Cover to promote preventive health programs;
- Reducing the Government’s role in price-setting of the Prostheses List but protecting clinician-consumer decision-making, and;
- Ensuring a robust and adequately resourced public health system remains available for people with low incomes and/or high health needs for whom the cost of private health insurance is burdensome, and for those who elect not to have coverage.