Health insurance set to drop from April 1
HEALTH fund premiums will fall under the biggest reforms to the system in 20 years Health Minister Greg Hunt has promised.
Announcing details of the scheme that will take effect from April 1 next year, Mr Hunt said the new system will see policies categorised into four tiers: Gold, Silver, Bronze and Basic.
"These reforms will have an overall neutral to -0.3% impact on premiums compared with current policy settings," he said.
This premium promise relates to average premiums across the entire sector but News Corp has revealed a government funded report shows some higher coverage products will dramatically rise in price by between 8 and 12 per cent.
Health fund membership has been plunging with consumers struggling to afford the product as premiums soared by three times the inflation rate.
Many consumers have been frustrated to find they were not covered for procedures they thought their health insurance was meant to pay for.
The new rules attempt to solve this problem by getting the industry to agree on a standard set of clinical definitions.
This means when a fund says it covers hip and knee replacements or cataract surgery it covers exactly the same procedures as every other fund that promises to cover these services.
This will make it easier for consumers to compare products and get the best value for money.
However, the changes will mean health funds no longer have to cover key procedures like hip and knee replacements, births or cataract surgery in Silver and Bronze policies.
People who wish to be covered for these services will have to pay for the most expensive Gold cover.
As they transition to the new categories the major health funds have said they will offer Bronze and Silver plus policies that may still include some of these procedures.
A government report predicts that within three years two in three Australians will have Bronze level cover that won't cover some of the most commonly claimed procedures in private hospitals. This could increase pressure on the public hospital system.
Mr Hunt says the reforms will "make private health insurance easier to understand" and give consumers transparency for the first time on what was covered.
"This is a no surprises approach that will, for the first time, provide clearer information to consumers and allow them to compare different health insurance policies and choose the cover that best suits their needs," he said..
This Gold Silver Bronze reforms come in addition to other reforms announced last year that will allow funds to offer a 10 per cent premium discount to the under 25s and cut the price funds pay for medical devices by $1 billion.
Health funds will also be able to offer higher excesses on polices that could see families have to pay the first $1500 of any private hospital treatment before their health fund provided any rebate.
This could help lower premiums but may mean people who can't afford the excess may have to rely on the public system.