By Peter Aroney, CEO, Doctors' Health Fund

The Federal Government has established its Private Health Ministerial Advisory Committee which ‘brings together key stakeholders in the private health sector to work in partnership on the development and implementation of possible reforms to private health insurance’. 

This reform agenda was heralded as part of the Coalition government’s election pledges in response to considerable debate over recent issues that have emerged in the private health insurance sector. 

We continue to advocate our position as the health fund for doctors alongside medical professionals who have been vocal participants in this debate. This is not least because medical practitioners, and their patients, are at the forefront of these issues. 

The issues include the: 

  • rise of exclusionary health insurance policies 

  • lack of standard terminology and transparency 

  • inability to compare policies 

  • increased product complexity. 

The committee will advise government on a series of reforms covering: 

  • product design and consumer information 

  • regulation affecting affordability and transparency 

  • providing better value for rural and remote consumers 

  • alternative funding models for general treatment 

  • other issues as directed by the health minister. 

Among the first items for review is a ‘gold, silver, bronze’ product classification. 

Easy comparison is just the start 

Product classification is intended to give consumers pre-defined standards so that health insurance policies can be easily compared. In turn, this should provide a level of confidence of what is, and is not, covered and make it easier for the consumer to see what they have bought. Importantly, we hope the reforms will include removing junk policies, which often cover things already paid for by the public system. 

These are worthy aims which, if achieved, will assist the medical profession in its dealings with patients. 

But this proposal may only go part-way to resolving the current issues that have arisen in health insurance. While it is important to understand what treatments are, or are not, covered in a health insurance policy, it is equally important to understand the likely benefits available under a policy when the need for hospitalisation arises. This will depend on a number of factors including whether the health fund has a contract with the treating hospital and to what extent medical fees will be reimbursed. 

Cost vs. value for money 

As we have pointed out in previous articles, some health funds have lowered the value of their medical schedules by not indexing for inflation or reducing the benefits paid for selected items. This means doctors might not be willing to operate under the terms of those schedules. 

The hidden out-of-pocket costs associated with policies that do not have widely accepted medical schedules can leave the consumer with a significant bill, even though the service was covered under the policy terms – the ‘hidden junk’.

Communicating to consumers the future value of a product (which manifests after hospital admission) during the purchase decision may prove to be the bigger challenge that ‘up-front’ classification of the policy coverage. If not handled properly, we might find a perverse outcome where consumers with a ‘gold-level’ level policy are even more affronted when they find their policy not fully covering their hospital admission. 

Health funds have an obligation to provide affordable products to their members. But at what cost does this affordability undermine the value of health insurance? If the product is affordable, yet provides little real value (in that the out-of-pocket costs are so large or unexpected that the policyholder is forced into the public system) then surely we have lost sight of the original purpose of our service. 

We would like to see greater transparency around the performance of health insurance products at the time of purchase. This would allow consumers to make a more-informed choice and avoid surprises down the track. 

There is a balance between affordability and providing a valuable service, and this is the real challenge ahead for the reform agenda. 

At Doctors’ Health Fund we believe in providing quality health insurance that provides real value to our members while supporting the medical profession at the same time. 

This article first appeared in the Avant Connect Magazine