Year on year CHF consistently hears about the confusion that PHI causes, the considerable out of pocket costs it generates and the impact of rising premiums. We set out this year to document these experiences with PHI through a four-step checklist and survey, see chf.org.au/healthy-cover. The responses to the survey were indicative of the concerns that we frequently hear from consumers – that private health insurance is low value, confusing and time consuming.
To date we have used the results in our submission to the ACCC’s report to the senate and to inform our work on PHMAC. The survey will remain open for the foreseeable future to allow us to see if concerns and issues change over time or in response to policy and premium price changes.
Consumers are highly sceptical of the value of private health insurance. They are aware of insurers’ large profit margins and cite this as a reason that they feel that they are paying unnecessarily high premiums. Despite the tax incentives to have private health insurance, a number of participants expressed that they would prefer to pay higher taxes and contribute to the public health system in this way rather than paying for a product they feel was not of value to them or others.
Gap fees featured frequently in the survey responses as an area of frustration. Consumers conveyed that, having already paid their health insurance premium, they should not be asked to pay out of pocket costs at the point of service. This appears to be particularly relevant for extras, or general, cover. However, this bias may be due to the greater frequency with which consumers use extras cover. This appears to be particularly true for consumers who are more frequent users of services. One such survey respondent said:
You have to pay $260 per month for private health and when you attend an appointment with a Dentist or physio etc.. you still have to pay the gap fees . So $260 per month plus 70 bucks Gap fees, plus remedial massage per hr $80 bucks that’s total of $ 410 for that month for one person alone. Total scam
The reasoning behind insurers covering set ranges of services in their policies is an area of confusion for consumers. Consumers indicated that they think that having to pay for services that they do not use contributes to premiums being higher than necessary. While CHF believes that while it should be mandatory for hospital insurance policies to cover a minimum and broad set of areas, as hospital insurance as ‘insurance’ in the traditional sense of the word, we suggest that insurers should either explain the reason that they offer such a wide range of services in their extra’s policies or consider reducing these.
Consumers use a range of ways to find information about their health insurance but the majority of consumers only use one source of information. Approximately one third of respondents to our survey used each of the government website, a specific insurer’s website, and a comparator website. This finding shows the importance of each of these sources being accurate, up to date and honest about the limitations of the information they display. While we do not believe that each of these sources need to be, or should, be completely comprehensive as they serve different purposes and target different audiences, we strongly believe that they should acknowledge their limitations.
More than half of respondents were able to complete the actions they wished to do using available information. This suggests that consumers are able to access the information they need when they choose to search for it.
A strong theme arising from the comments was that complexity of policies makes comparing and moving between policies a significant challenge. Consumers report that they find the process of comparing policies time consuming and difficult. When they are able devote sufficient time and effort to compare policies they often find they are able to purchase a comparable product for a considerably lower price. One consumer told us:
I did this a few months ago and appear to have saved up to around $1700 / year although refunds could be a little less on some items. It was a very complicated process especially for older people who have a relationship with the old insurer and pre-existing conditions
Another consumer concisely captured the implications of misleading information being conveyed. Our data cannot determine whether these practices are deliberately misleading or merely accidental, however in either case this practice is problematic.
Health insurance websites are so complicated it is difficult to work out often what the benefit will be. For two things recently I called first and then later found the advice they provided was not consistent with the benefit they would pay – that is to say no benefit.
Consumers also expressed that they have difficulty understanding the practice of insurers paying differential amounts for different medical item numbers, particularly for extras insurance. For example, when going to the dentist consumers don’t differentiate between each of the steps or actions taken by their dentist which are then charged as separate items. Despite this, insurers are in the practice of limiting the amount they will rebate per item in each year, not the overall amount paid for a dental service. As above, while CHF does not necessarily disagree with this practice we feel that insurers are not adequately explaining how and why the rebates paid are limited per item. Both insurers and practitioners could work to change this practice by equipping consumers with tools to better understand the range of items included in a consultation or service and how they are differentially charged. This would empower consumers to get better value from their insurance and to better be able to compare insurance policies when they wish to change insurance coverage.
When consumers do compare policies and attempt to switch, they find this very time consuming. This is particularly true for extras policies, to which insurers frequently apply a range of specific sub limits. Respondents generated an ideal comparator site wish list, which they would like to be able to use to compare policies to each other. The items on this wish list included:
- A tool that allows them to compare the rebate they will receive for specific conditions or consultations.
- To be able to search for health funds and policies which cover specific health needs. Current comparator websites rank policies based on the number or range of policies they cover, not the specific conditions or issues they cover
- An explanation of government imposed rebates or extra costs, such as the lifetime health cover levy, and an ability to see how these apply to the premium they will pay
- A website or tool that doesn’t follow up with unwanted phone calls or emails. The practices of comparator websites, such as iselect which follow up consumers with calls or emails were mentioned as being frustrating and annoying to consumers