Are We Being Ripped off by the $19 Billion Health Insurance Industry?
Health minister Sussan Ley recently announced that a review of the health insurance industry would be conducted. The industry, which considers 50% of the Australian population as customers, is known for avoiding payment, paying the lowest price where possible and causing many to question its value for money.
Australians may feel that their health insurer doesn’t save them money, but actually ends up costing them more when they’re told they’re not covered for something. This has certainly been the cause for much of the uproar across the country and it’s about time the industry stopped breaking deals with its customers. A recent article on News.com.au covering this topic quotes a source (an ex-health insurance employee) as claiming “you end up paying $1,500 per year for extras to claim $200 back”. This was in reference to her recommendation to switch to a no-frills hospital plan as she believes that unless you require a lot of dental, psychiatric, chiropractic services and don't have extras, anything else is likely to be a waste of money.
Australians Getting Ripped Off
Each and every Australian health insurance company’s Facebook page is congested with complaints about how humble citizens have been left out of pocket, or had their claims refused. Insurers constantly change their policy rules, which make it incredibly difficult to ascertain whether one is covered, or not.
Pablo Munoz writes on NIB’s Facebook page about his “health insurance rip-off scheme” that left him out of pocket by $1,193, because his insurer would only pay a fraction of his operation costs.
He wrote, “Had I saved my $158 per fortnight that I pay for this scam, I would have been able to cover the entire procedure myself without feeling the pinch… utterly useless.”
NIB responded to him saying he could reduce his out-of-pocket expenses if he were to seek “our doctors that participate in our Medigap scheme.”
However, Mr Munoz is not alone, because many customers have complained about being scheduled for an operation, to only find out days before that their insurer has changed their policy meaning they are no longer covered.
[Read more on how to pay less and get cheaper health insurance in Australia]
Sussan Ley, Health Minister spoke at the National Press club during the first week of November slamming what she described as “Junk” policies which were consistently increasing in price. Despite this, however, they contained more and more exclusions making them worse value for money than ever before.
Ley continued to argue “Patients are the reason we have a health system. They should never be regarded as just an input or a number – they should be at the very centre of what the healthy system does. However, the reality is, this is no longer the case. Their needs have changed, and our system has not changed to match them.”
The former health insurance sales employee quoted in the opener of my post above, described her experience of working in the industry as follows: “In order to reach targets, we were told not to mention certain exclusions or restrictions, or at least not go into heaps of details, saying that it was all clearly set out in the policy documentation – which it was not.”
To top things off and prove that health insurance was costing Australians billions every year, the ex-employee added that customers would be better off downgrading to the cheapest, no-frills hospital insurance policy and simply putting the extra money into an account which they could use to only pay for procedures.
As a result of all these consumer complaints, you will be happy to know that the Federal Government launched its public consultation into the private health sector on the 8th November 2015 with the objective of reviewing customer's access to affordable, quality and timely health services into the future. So let's hope the outcome and actions taken help improve the situation as it currently stands.
Real Life Examples
Mr Davies has been paying his Medibank Private premiums for the past 9 years without fail, that’s of course until the day he was rushed to hospital with a benign tumour growing near the lower part of his spine. Mr Davies was told that he needed surgery to remove the growth that was causing him debilitating pain.
When Mr Davies called Medibank, he was told that his insurance did not cover that form of operation. A man who had been paying over $140 per month for the past 9 years soon learnt that a cheaper plan from the company would have covered the operation, excluding the massages and natural therapies.
The biggest problem with health insurance companies is their policy documents and the way that they are written. The wording and language are so convoluted that it’s difficult to make heads or tails of what you’re in fact covered for. It baffles many of us as to why such an important form of insurance, crucial for a happy and healthy life, can be so complicated to understand. What starts out as offering the opportunity to save you money, could often turn out to do the exact opposite.
13-year-old James Tharle from Melbourne was told after having his leg amputated due to a rare bone cancer, that his insurer would not pay for a prosthetic leg costing $80,000. The Tharle family despite having high-level cover for the past 20 years were told that because their 13-year-old son was admitted to a public hospital (the Royal Children’s Hospital) as private patient, they would not cover his operation of after-care costs.
Medibank Private mentioned to the Tharle parents that they would have been more willing to help James if he was being treated within the private system. This is because the insurer would have been able to strike a cheaper deal over costs.
Eventually the situation was resolved, but not after the Tharle family was left for a seemingly long period not knowing whether the operation was going to be funded at all by Medibank Private. The company issued a statement at the time saying that the hospital James’ doctor had recommended was not on the Federal Government's list, which Medibank adheres to for prosthesis funding. This meant that the insurer would not cover the full cost of the device. This refusal by Medibank Private was purely because James’ surgery was being performed by a public hospital.
Although the operation was successful and James did finally receive what he needed, it’s a clear illustration of how complex the rules governing our health system really are. Talk about adding insult to injury when all a family wanted was what's best for their sons life!