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Federal Government to push young people into junk policies

CHOICE says the Federal Government's proposed health insurance reforms fail to protect young consumers

12 October 2017

Consumer group CHOICE is expressing concern at reports the Federal Government will continue to offer rebates for "junk" insurance policies and will incentivise more young people to take up insurance. 

"With more than $6 billion of taxpayer funds already being spent on health insurance rebates,[1] incentivising young consumers with a further discount for taking out a 'junk' policy would be pure folly," says CHOICE's Acting Director of Campaigns & Communications Erin Turner.

"The fact is trying to pass off 'junk' policies as 'basic' policies is outright misleading.

"While junk might seem like a bargain, these policies cover less than 1% of treatments in a private hospital," Ms Turner says.

CHOICE defines 'junk' policies as those that either excludes treatment for almost all illnesses, including heart attack, stroke and cancer, or that only allow the policy holder to be treated as a private patient in a public hospital.

"These junk products account for around 13% of all hospital and combined policies on the market and it appears the Federal Government has failed to act and take out the trash," says Ms Turner.  

"Someone who purchases very low value junk cover receives a government rebate for this policy, yet will end up using the public system when they're sick. In effect, the government pays twice while insurers get new customers without providing real benefit."

"We need the Federal Government to stop providing tax breaks and rebates for 'junk' health insurance policies that offer little value to consumers or the community more widely – not double down with additional discounts," Ms Turner says.

Although highly critical of the Federal Government's failure to act on "junk" insurance, CHOICE welcomes the news that: 

  • Mental health patients will be able to upgrade their level of cover without a waiting period.
  • Policies will be categorised into four levels of cover  - Gold, Silver, Bronze and Basic.
  • The Government will regulate price reductions for various benefits and procedures such as pacemakers, defibrillators and hip and knee implants.
  • The Private Health Insurance Ombudsman will get extra resources to investigate private health insurers.

"With consumers continuing to struggle with the cost of private health insurance, any regulated increase in premiums next year will continue to see consumers discharge their private cover," says Ms Turner. 

For more information go to

Media Inquiries:

Tom Godfrey, Head of Media and Spokesperson, 0430 172 669, @choice_news

Health insurance saving tips: 

  • Take the Do I need health insurance? health check at
  • If you're healthy, under 31 and earning less than $90,000 a year, consider making extra deposits into a savings account instead of buying 'junk' insurance 
  • If you need cover, a top level hospital cover with an increased excess is often better value than reducing your cover
  • Check to see if you can join a restricted membership health fund for your industry
  • Think of extras cover as a budgeting tool. If your annual benefits paid out add up to less than the cost of your policy, it may not be worth the money