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Why insurers should reduce health premiums during the coronavirus crisis

We think a 50% drop in the availability of services should mean you pay 50% less on your premiums.

stethoscope on hundred dollar notes
Last updated: 07 April 2020

Need to know

  • The COVID-19 crisis means Australians can’t access many of the private health insurance services they're covered for
  • CHOICE is calling for health insurers to reduce premiums by 50%
  • Small SA health fund Health Partners has already reduced premiums by 30% for extras insurance and 10% for hospital

CHOICE says health insurers should stop charging for benefits that aren't available and reduce premiums by at least 50% in light of the COVID-19 coronavirus crisis.

According to modelling by the Australia Institute, hospital insurance benefits may be reduced by 50-70% and extras by 10-30%.

Non-urgent elective surgeries, like hip replacements and cataract eye surgery, were cancelled by the federal government to free up beds for COVID-19 patients and conserve protective equipment. Only urgent emergency surgeries such as cancer and heart surgery are still going ahead. 

Dentists are limited to performing emergency procedures, such as for pain relief. Other extras services will also be impacted by the physical distancing measures needed to stop the spread of the infection. 

While some physiotherapy, psychology and speech therapy services will be available online, other services such as dental check-ups, chiropractic or massage will be impacted by the measures.

Health Partners reduces premiums

Small South Australian health fund Health Partners has already taken action, reducing premiums for their members. Members will pay 30% less for extras policies and 10% less for hospital policies for an initial period of three months, starting on 1 May.

CHOICE is calling on other health funds to follow suit: "Health funds must urgently take action to make sure people aren't paying for services they can't access," says CHOICE health insurance expert Dean Price. 

"We urge the industry to do the right thing for people and reduce their premiums by 50% across the board. We will call out any private health insurer who is ripping people off by making them pay the full price but only getting half the service," he says.

Medibank, Bupa HCF, NIB and HBF pledge not to benefit from coronavirus crisis

CHOICE has contacted the biggest health funds, and they told us they are planning to give extra profits back to their members.

So says Sheena Jack, CEO for nonprofit fund HCF: "We will not be keeping any windfall gains that may accrue by a reduction in claims. We are exploring how we help members now as well as how we can pass back any savings to them that accrue from reductions in claims due to COVID-19."

CEO John Van Der Wielen of nonprofit fund HBF says "if the current situation continues for an extended time, we'll certainly consider how we should use accumulated funds for the benefit of our members."

Medibank is also pledging to return any additional benefits from lower claims to members.

NIB says it needs more time to make an assessment but is considering expanding cover and premium reductions.

Bupa is also asking for more time. "While we cannot outline any additional discounts or cashbacks at this stage, we are committed to acting in the interests of our customers and will not seek to benefit from this unprecedented situation. We are looking into the best way to do this," says a Bupa spokesperson.

But the Consumers Health Forum (CHF) says funds should already be able to come up with a reasonable estimate of their expected profits. "The funds need to do more than give unspecified promises of returning surplus funds sometime in the future. There needs to be some form of accountable undertaking given to members now," says CHF CEO Leanne Wells.

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