Price increases for excess payments, cuts to select benefits and discounts for young people are part of the most significant reforms to be made to the private health insurance industry in almost 20 years.
The changes, expected to be announced by Health Minister Greg Hunt today, form the basis of the government's plan to curb the rising health
insurance costs that are causing families to cancel policies in
Central to the plan is a discount for younger generations in an effort to
encourage the uptake of health insurance. People from 18 to 29 would
gradually earn a 2% discount each year, so that a 20-year-old, for instance,
would build up to the maximum discount of 10% by the time they were 25.
But the discounts are not permanent; they would phase out once the
policyholder reaches the age of 40. This is according to reports from the ABC, which first revealed the reforms a day before the official
The reforms aim to combat the rising cost of health insurance premiums – which have been surging by an average of 5.6% a year since 2010 – by
increasing the cost of excess payments. Doing so, along with a raft of
additional changes and cuts, is expected to lower premiums and slow the
rate of next year's rise to approximately 3%.
Moving to a policy with higher excess payments and lower premiums will not
be mandatory for existing holders when it comes into effect in April 2019.
According to a report from the Sydney Morning Herald, the maximum excess
for private hospital insurance is believed to rise from $500 to $750 for
singles, and from $1000 to $1500 for couples and families.
Health insurance has long been considered needlessly confusing; the 37
providers offer a combined 46,500 policies. A four-tier system has been
proposed in response to make coverage simpler. Hospital cover will be
offered as gold, silver or bronze, with an introductory 'basic' tier excluding general treatment or extras cover.
A number of health care benefits paid by health insurers have been scrapped
under the reforms, including $188 million in prostheses payments in 2018, and coverage for natural therapies, such as homeopathy, naturopathy and
Instead a focus has been placed on mental health, with patients being able
to upgrade their level of cover without a waiting period, and it will
regulate price reductions for various benefits and procedures, such as
pacemakers, defibrillators and implants for hips and knees.
There is no indication "junk" insurance policies have been scrapped, a
development that causes concern for consumer groups such as CHOICE. These
policies account for approximately 13% of all hospital and combined
policies on the market, and yet they cover less than one percent of private hospital