Patients are paying a difference of more than $800 for the exact same medical procedures depending on their private health insurer, a new report from the Australian Medical Association shows.
Different insurer rebates for the same procedure result in some patients paying $800 more for a coronary bypass, almost $600 more for a knee replacement and more than $500 more for child birth, the report, published on Tuesday, found.
Australian Medical Association (AMA) president Dr Omar Khorshid said navigating insurance policies remains “confusing and complex” for patients.
“Benefits paid by insurers for the exact same service vary significantly – our selection shows that the smallest variation across a handful of insurers was 8% but goes as high as 46%,” he wrote in a foreword to the report.
“This amount of variability is why the AMA was called for a minimum amount returned to the health consumer for every premium dollar paid. There needs to be a standardised return that is higher than the current private health insurance industry average right now.”
The report found most complaints about private health insurance were about non-payment or delayed payment of benefits, or disputes about the gap paid; premium increases; membership issues; waiting periods for pre-existing conditions; and service, including information provided that did not meet patient needs.
“Incorrect or unhelpful information can lead to people misunderstanding what they are covered for, and result in insured patients facing unexpected out-of-pocket costs,” the report found.
“This can be particularly problematic when the advice from an insurer is provided verbally or in-person. Moreover, online detail about a policy or in brochures can be challenging to understand for the majority of consumers.”
Reforms that were intended to make private health insurance less confusing for patients were found to have failed. In 2019, private health insurance policies were labelled as gold, silver, bronze or basic, with “plus” versions of those categories also available. Gold policies represent the highest level of coverage and basic, the lowest, with the labels created to help consumers more easily identify what level of coverage they need to avoid junk policies.
But a Choice review found more than 215 silver and silver plus policies cost more than gold policies from competitors, meaning consumers are still confused and paying more for less coverage.
The AMA has encouraged people to review their private health insurance policy to make sure it meets their needs.
Doctors also needed to be accountable, Charles Maskell-Knight, a former senior public servant in the commonwealth department of health and private health insurance expert, said.
“Most insurers have the same no/known gap arrangements available to doctors across the ACT and NSW,” he said.
“However, the report card shows that in almost every case there is a much lower proportion of no gap services in the ACT compared with NSW, reflecting the charging practices of ACT doctors.”
He said the AMA report had also “glossed over” the relationship between gap payments and premiums.
“Eliminating gap payments would need medical benefits paid by insurers to increase by about $750m, assuming that doctors did not increase their charges in response,” he said.
“To fund this insurers would need to increase premiums for hospital cover by around 4% on top of any other premium increases.”
Australian Prudential Regulation Authority member Geoff Summerhayes warned in 2020 that only three private health funds will be financially viable within two years if the industry does not take urgent action to break out of its “death spiral” caused by young people abandoning private health insurance, as it offered them little value for money. It means those with insurance tend to be older people with more expensive medical claims.