An ACCC report into the private health insurance industry has found that affordability of private health insurance remains a significant concern for consumers.

The complexity of policy information provided by insurers is another key issue, reflected in increasing complaints about the industry.

“Our report found that people are shifting towards lower-cost policies with lower benefits,” ACCC deputy chairwoman Delia Rickard said.

“We are also concerned that consumers continue to have trouble understanding their policies, particularly when they are trying to make a claim.

“It is in the interests of both insurers and their customers to be clear and transparent about policy details. This helps people to make informed decisions about the level of insurance cover they need and can afford,” Ms Rickard said.

Key industry developments and trends in 2015-16:

• The affordability of insurance remains a significant concern for consumers, which is supported by research that shows household spending on private health insurance premiums has increased steadily over the past decade.
• Consumers are shifting towards lower-cost policies with lower benefits. Between June 2014 and June 2016 there was a 400,000 reduction in hospital policies with no exclusions (which can be equated with ‘top cover’), whilst an additional 600,000 hospital policies with exclusions were taken out.
• The amount of hospital benefits paid by health insurers per person increased by 4.2 per cent, along with a 2.9 per cent increase in general benefits per person.
• Average out-of-pocket expenses incurred by consumers from hospital episodes increased by 6.9 per cent, compared to only 0.7 per cent for general treatments.
• Overall consumer complaints to the Private Health Insurance Ombudsman (PHIO) rose for the third consecutive financial year, although the year-on-year increase of 3.5 per cent followed much larger increases of nearly 16 per cent in 2013-14 and 24.5 per cent in 2014-15.
• The PHIO continued to receive the highest level of complaints regarding the benefits paid by insurers to consumers (over 30 per cent of total complaints in 2015-16). The main issue of consumer concern relating to benefits was hospital policies with unexpected exclusions and restrictions.
• Consumers increasingly rely on information provided by commercial comparison websites when making decisions about their private health insurance. Around 40 per cent of consumers who made comparisons between insurers prior to selecting their current policy utilised a commercial comparison website, such as iSelect and Compare the Market, to assist their decision making.

Each year, the ACCC is required by the Senate to produce a report on key competition and consumer developments and trends impacting on people’s health cover. This report covers the 2015-16 period. The report is available here.

The ACCC has recently taken action:

• against Medibank and
• against NIB.

Not good enough: dentists

The Senate inquiry must go further than ACCC and hold private health insurers accountable, according to the Australian Dental Association (ADA), as the report neglects to unequivocally call out private health insurers’ anticompetitive behaviour.

The ADA is urging the Senate Inquiry into private health insurance to highlight the damage health insurer practices, such as discriminatory rebate practices and the shift towards a conflicted corporatised insurer-owned dental practice model impacts on consumers’ continuity of care and quality of treatment, and recommend legislative change to outlaw such practices.

General treatment or ancillary policies also known as ‘extras cover’, cover more Australians (13.5 million) than hospital policies (11.4 million). The majority (52%) of claims paid out to policy holders are for dental care. The Senate inquiry must scrutinise private health insurers’ activities as they impact on policy holders accessing ancillary health services, including dentistry.

ADA federal president Dr Hugo Sachs strongly criticised the ACCC report: “While the ACCC report outlined some thrust of the ADA’s concerns, it has downplayed the significance of insurers’ actions on patients’ access to continuity of care, on their ability to receive value for money, and on the overall competitive impacts on the dental sector. Stating that certain behaviour ‘does not represent best practice’ does not cut it.

“Not all policy holders are treated equal. For years, insurers have imposed a regime of discriminatory rebates. If you want to maintain your relationship with your existing dentist who chooses not to be contracted to an insurer, you get less back on your claim. You get less back even though you pay the same amount of premium for the same policy as another person. This practice, combined with reports we have about insurers’ call centre staff shifting the blame for their own discriminatory rebates by suggesting the non-contracted dentist’s fees are expensive is misleading and deceptive; not to mention distorting the market by steering policy holders away to their own affiliated or owned dental practices.”

Over the years, insurers have also used their claim processes to obtain sensitive price and fee information from non-contracted dentists to ultimately set up competing dental practices and inform their rebate setting practices.

Dr Sachs continued: “This model of corporate/insurer owned and run health services should not be permitted. There is a glaring conflict of interest. An insurer owns the practice, employs the health practitioner, determines the fee for the service at one end and also sets the rebate the policy holders get back at the other end, and is vulnerable to pressure from shareholders to deliver a return. Ultimately, policy holders stand to lose in the long term.”

Public hospitals overrun: ambulance

The health cover report comes at a time when the NSW Ambulance Service is highlighting the shortage of beds. On several days so far this winter, NSW Ambulance paramedics have found some of Sydney’s largest hospitals struggling to maintain services because they were full.

The Australian Paramedics Association (NSW) is concerned that hospital bed block has all but paralysed Liverpool Hospital, Bankstown Hospital and Fairfield Hospital over a number of days.

 “Ambulance crews are being stuck at these hospitals waiting for hours, tending to patients on ambulance trolleys in the hallways because Emergency Departments are being overwhelmed and each of these large hospitals is full,” said APA (NSW) president Steve Pearce.

“We have seen up to ten ambulances queued up for hours at Liverpool Hospital unable to unload patients and that is pushing the already stretched resources of NSW Ambulance, making it very difficult to service the public,” Mr Pearce said.

“NSW Ambulance does not employ enough paramedics to manage the normal workload around the state, let alone during a huge surge like this.

“The hospitals are full with a lot of very sick patients and we are seeing new patients with a range of ailments and injuries having to wait way too long to see a doctor.

“This coincides with the height of the flu season but there simply are not enough hospital beds or enough ambulances on the road to handle the demand.”