This is the 20th report to the Australian Senate prepared by the Australian Competition and Consumer Commission (ACCC) on competition and consumer issues in the private health insurance industry. This report is for the period 1 July 2017 to 30 June 2018 (the reporting period).
This report analyses key competition and consumer developments and trends in the private health insurance industry during the reporting period that have affected consumers’ health cover and out-of-pocket expenses. This report also focuses on how private health insurers should communicate detrimental policy changes to consumers.
The costs of private health insurance continue to be of concern to consumers. In 2017–18, private health insurance participation rates continued to decline, while gap payments for in-hospital treatment increased. Further, recent premium increases have been greater than inflation and wage growth. Cumulative premium increases have been higher than wage growth over the past five years indicating that households with private health insurance are contributing an increasing proportion of their budgets to paying premiums.
Out-of-pocket costs are also of concern for consumers, with gap payments for in-hospital treatment having increased when they are payable. While the percentage of in-hospital services delivered without a gap payment remained relatively stable, and most in-hospital treatments are delivered with no gap payments required from patients, there has been concern around some patients paying significant out-of-pocket costs and being charged hidden administrative and booking fees.
There was a reduction in the proportion of Australians holding private health insurance during 2017–18, as occurred during the previous year. In response to higher prices, some consumers are switching to more affordable policies with greater exclusions or excess payments while others appear to be exiting the private health insurance market. The Australian Government is currently implementing reforms with the aim of making private health insurance simpler and more affordable.
In 2017–18, complaints about private health insurance to the Private Health Insurance Ombudsman (PHIO) decreased by 21 per cent, following their historic high in 2016–17. The PHIO reported that last year’s decrease was partly attributable to its work in assisting insurers to improve their complaint handling processes, improvements in the complaint handling processes of the larger insurers, and smaller premium increases in 2018 compared to recent years. Despite this decrease, the number of complaints received by the PHIO in 2017–18 is the second highest level recorded over the past five years.
The PHIO reported that 82 per cent of complaints in 2017–18 were about health insurers. The benefits paid by insurers to consumers continued to receive the highest level of complaints—around 36 per cent of total complaints—the main issue of concern being hospital policies with unexpected exclusions and restrictions.