The Commonwealth Ombudsman in its role of investigating complaints has insight into many of the consumer issues raised by Bupa’s recently announced detrimental changes to hospital insurance policies. Typically with other insurers in the past, the Office of the Commonwealth Ombudsman (the Office) receives complaints about policy exclusions and restrictions, and the communication of policy changes by health insurers. Less frequently, the Office receives complaints about problems experienced by consumers in electing to be private patients in public hospitals.
This report discusses two changes that are being made by Bupa which will have a detrimental impact on consumers. The first is policy restrictions becoming exclusions on Bupa’s basic and mid-level hospital policies. The second is alterations that Bupa has made to its medical gap scheme affecting non-contracted hospital and public hospital admissions.
The impact of the change to exclude rather than pay partial benefits towards a list of services on its basic and mid-level hospital policies is outlined in this report. In summary, the change removes an entire benefit from payment, including the hospital accommodation, prosthesis, medical gaps and other benefits previously eligible for benefit.
The impact of Bupa’s change to its medical gap schemes and to reduce benefits particularly in public hospitals is less clear. The financial impact of the change on a single episode of hospital admission for an individual may be small, as the reduction in benefits only applies to the medical gap benefit that Bupa pays above the Medicare Schedule Fee. We also note that some consumers may opt to use the public system instead which makes the impact of the change more complex to approximate, because although there may be no cost to a consumer by electing to be a public patient, the less tangible benefit of being able to choose your own doctor is difficult to measure.
The Office acknowledges that it is a commercial decision for private health insurers to determine the extent of cover it provides over and above its statutory requirements as it seeks to balance increasing health costs against the goal of minimising premium increases and, in the case of for-profit funds, achieving a reasonable return on investment for shareholders or owners.
We also acknowledge that certain other providers have taken decisions to reduce or remove minimum or restricted benefits. Australia’s systems of health funding and health insurance are complex. However, it is imperative that if a fund is to make significant changes to its policies which may have a detrimental impact on consumers that the changes are explained in plain English and in a way that prominently communicates their potential impact.
The Office will continue to monitor this issue and if there is a significant increase in complaints from Bupa policyholders about any of the changes it has made, this will be raised with Bupa and if appropriate, reported in the PHIO quarterly bulletins1 or a special report on the subject.