The government hopes that axing cover for 17 natural therapies will help keep health insurance costs manageable.
In the face of rapidly rising health insurance premiums, the Australian government has announced a host of wide-ranging reforms designed to make private health insurance simpler and more affordable.
One of these reforms, which comes into effect on 1 April 2019, removes a long list of natural therapies, such as yoga, Pilates and naturopathy, from general treatment cover.
The government says this will help reduce expenses for insurers, thereby helping them to keep the cost of their policies more manageable.
The government supports the private health insurance industry by offering a rebate to anyone who buys private cover. This rebate applies to both hospital and extras policies.
Now the government has decided that policies offering the following 16 natural therapies are no longer rebate compliant – meaning all insurers have now dropped them from cover:
- Alexander technique
- Bowen therapy
- Tai chi
These therapies were usually found on mid- and top-tier extras policies.
Are any natural therapies not affected?
Some natural therapies are not affected by the reforms, and you’ll continue to find them on many policies. These include the following:
How will this affect you?
The government expects this reform to save private health insurers money, as they will no longer be paying benefits for treatments that studies show are ineffective at treating or curing disease. This, in turn, will benefit you since insurers will be able to reduce their expenses and therefore keep costs more manageable.
Taxpayers can also save money because lower healthcare costs mean fewer taxes will be spent providing private health insurance rebates.
It does mean that your policy might change. If your policy includes any of the affected natural therapies, they have now been dropped regardless of who you are with.
Will it impact your wallet?
It is unlikely that this change will impact the cost of your policy in the short term. In fact, the cost of your policy will probably continue to increase year after year. However, if the reforms are effective, it will mean that your policy will not increase by as much every year.
Why is it changing?
Ultimately, the government is trying to slow down the unsustainable rate at which private health insurance premiums have been rising in recent years. If people can’t afford private health care, then the burden on the public system gets too high. So these reforms are all part of the effort to keep costs at a manageable level.
The government chose to cut these specific treatments because a 2015 government review concluded that these treatments weren’t shown to be effective in treating or curing disease.
When did it change?
This aspect of the reforms came into effect on 1 April 2019.
What else is changing?
The change to natural therapies cover is just one of several reforms. Here are some others:
- Simplified product categories. All hospital policies will be required to fit into a Basic, Bronze, Silver or Gold tier structure, making it easier for consumers to compare policies side-by-side. It's the same for extras policies but without Basic. Insurers have already started offering these products and by April 2020, all policies will fit into this framework.
- Discounts for young people. Insurers are now allowed to offer a 2% discount to members under 30 for every year they hold a policy. The total discount will be capped at 10% and will be removed when the person turns 40.
- Better access to mental health services. Customers who have hospital policies with restricted psychiatric care can now upgrade their cover to a policy that includes full psychiatric cover without having to serve a waiting period for the treatment.
- Increase in maximum excess levels. Insurers can now offer policies with a higher excess (a maximum of $750 for singles and $1,500 for couples). This gives customers more choice, while also allowing them to reduce their premiums.