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Private Health Insurance Reform Package - What It Means For You

13 October, 2017
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Updated 30.10.2017

What is the Private Health Insurance Reform Package announced by the Federal Government?

The Minister for Health has announced a package of initiatives to make private health insurance simpler and more affordable for consumers.

Does CBHS support the private health insurance reform package?

Yes.  CBHS endorses the efforts being made to address both affordability and simplicity for consumers.

Did CBHS participate in the development of the reform package?

Yes.  CBHS  were represented in the development process for the reform package by our industry associations, Private Healthcare Australia and HIRMAA.

If the Government initiatives reduce costs how and when will CBHS pass these cost reductions onto members?

CBHS is committed that every dollar saved through the implementation of the Government initiatives will be passed onto our members in the form of lower premium increases. 

The first cost reduction associated with prosthesis pricing reform will take effect from February 2018 and will be passed through to members in the premium increase from 1 April 2018.

 

What are the specific reform initiatives and when will they be implemented?

Initiative

Description

Implementation Timeframe

Prosthesis pricing reform

The Government will reduce the prices paid by private health insurers for prosthetic devices over three years from 1 February 2018. These prosthesis include ophthalmic, ENT, urogenital, cardiac, cardiothoracic, vascular and orthopaedic devices.

Commencing on 1 February 2018

(price reductions will be factored into the 2018 premium increase ie premium increases will be lower than expected)

Hospital upgrade for mental health issues

Private health insurers including CBHS will provide members with hospital insurance the one-off opportunity to upgrade their cover and access mental health services without the need to serve waiting periods.

1 April 2018

Premium discount for younger Australians

The Government will allow insurers to discount private health insurance premiums for 18 to 29 year olds by up to 10%. This will phase out after people turn 40.

1 April 2019

Maximum policy excess

The Government will increase the maximum excess members can choose on hospital policies from $500 to $750 for singles and from $1,000 to $1,500 for couples/families. For those members who choose higher excess products their premiums will be lower than the same product with a lower or zero level of excess

1 April 2019

Removal of select natural therapy services from Extras products

Private health insurance will no longer cover a range of natural therapies such as homoeopathy, iridology, aromatherapy, herbalism, kinesiology, Alexander technique, Bowen therapy, Buteyko, Feldenkrais, Pilates, reflexology, Rolfing, shiatsu, tai chi and yoga

1 April 2019

Gold/Silver/Bronze/Basic product categories

The ability for consumers to compare private health insurance products will be simplified through the adoption of four categories of products – Gold, Silver, Bronze and Basic.

1 April 2019

Standard clinical definitions

Private health insurers will adopt standard clinical definitions in product and other documentation. These changes will make it easier for members to understand the parameters of their insurance cover.

1 April 2019

Strengthening the Private Health Insurance Ombudsman

The Government will provide additional powers and funding to the Private Health Insurance Ombudsman to strengthen their ability to protect the interests of consumers and to improve their website privatehealth.gov.au to assist consumers to more easily compare and select a health insurance policy that best meets their needs.

1 April 2019 (to be confirmed)

Why are most of the initiatives taking effect from 1 April 2019?

Many of the initiatives announced by the Government will involve legislative changes and the Government is allowing sufficient time for this legislation to be drafted and passed through Parliament.

Is the Government considering other reforms?

Private health insurers including CBHS will continue to work with the Private Health Ministerial Advisory Committee on a range of further reform initiatives including:

  • Reinsurance arrangements (known as Risk Equalisation)
  • Improving the transparency of medical out of pocket costs
  • Addressing low value hospital care including methodologies for rehabilitation and mental health care
  • Arrangements for privately insured patients in public hospitals

Depending on the outcome of the Government’s considerations, changes in these areas will further reduce costs faced by private health insurers and place downwards pressure on premiums.

What will be the impact of the reform package on me?

The Government estimates that the reform package will deliver savings for the average private health insurance member of $100 for singles and up to $200 for families over three years. 

The specific impact on individual CBHS members will depend on the impact of each initiative on the product each member holds.  This information is not available yet as CBHS  works through the details of each initiative in the reform package.

When will I be advised what the specific impact is for me?

CBHS are committed to ensuring transparency for our members and we will advise you of any changes to your policies in advance of making those changes.

Any initiatives which reduce the costs faced by CBHS will be factored into the annual review of premiums ie premiums will be lower than would otherwise be the case.  The CBHS Board is committed to ensuring that lower costs are passed on in full to our members.

Any initiatives that impact on what a member can claim under their policy will be communicated to impacted members at least 30 days in advance of the relevant change.

When will I be able to access the premium discounts for members under the age of 30?

The Government will need to introduce legislative change to allow private health insurers to offer discounted private hospital cover to people aged 18 to 29.  Legislation currently prevents insurers from offering premium discounts to people based on their age.

Insurers will be able of offer premium discounts on hospital cover of up to 2% for each year that a person is aged under 30, to a maximum of 10% for 18 to 25-year-old.  These discounts will gradually be phased out once a member turns 40.

This discount arrangements are expected to be in place by 1 April 2019.

Will the discount arrangement be back dated?

No.

Why are the discounts only being offered to those under 30 years of age?

Younger people, particularly those under the age of 30, have lower rates of participation in private health insurance than other age groups.  The Government’s decision to allow private health insurers to offer discounts of up to 10% for those under the age of 30 is designed to encourage more young people to take out private health insurance. 

The sustainability of private health insurance relies on a broad membership base and attracting an increased number of younger people will put downwards pressure on premium increases and improve affordability for all members.

I’m booked in to have surgery in the next few months and require a prosthesis, can you tell me what prosthetic devices will reduce in price?

The Government has advised that the price reductions will begin taking effect from 1 February 2018 and a wide range of prosthesis are covered by the proposed price reductions.  Devices include ophthalmic, ear, nose & throat, urogenital, cardiac, cardiothoracic, vascular and orthopaedic devices. 

CBHS do not recommend that our members delay planned surgery.

Can I still claim for natural therapies on my Extras cover?

Yes.  The Government will need to introduce legislative change to remove select natural therapies from Extras cover.  Those changes are expected to be in place from 1 April 2019.  Until then members will still be able to claim for all the natural therapy services available on their current cover.

The Government intends to remove the following natural therapies:

  • Alexander technique
  • Aromatherapy
  • Bowen therapy
  • Buteyko
  • Feldenkrais
  • Herbalism
  • Homeopathy
  • Iridology
  • Kinesiology
  • Naturopathy
  • Pilates
  • Rolfing
  • Shiatsu
  • Tai chi
  • Yoga

The Government has made this decision following their review which found there is no clear evidence demonstrating the efficacy of these natural therapies.

Other natural therapies like massage and acupuncture will remain claimable on Extras covers and are subject to normal benefit limits.

You can find the Minister's announcement and Private Health Insurance Reforms fact sheets through the links.

 

 
If you have any other questions about the Private Health Insurance Reform Package, you can reach us on CBHS' Facebook or on 1300 654 123.

 

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