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ACCC questions lack of transparency in private health


The ACCC has asked the Senate to empower consumers as part of the government's current round of health care reforms.

Private health insurers aren't giving consumers enough information to make informed decisions about their private health care, according to the Australian Competition and Consumer Commission (ACCC) in its 2016-17 report to the Australian Senate published yesterday.

The consumer watchdog is adding its voice to the chorus of input surrounding the government's current round of health care reforms, stating that it would like to see the reforms take the consumer's perspective into account.

That would entail requiring insurers to be more transparent about the extent of each policy's coverage, providing more information to help consumers make informed comparisons and being clearer about the actual out-of-pocket expenses possible for each covered benefit. Related to the latter is the ACCC's request for insurers to provide more detail about gap arrangements. These are proprietary networks of private hospitals set up by each insurer to help customers avoid large out-of-pocket expenses, but which also limit customers to specific hospitals.

"The new minimum data set should include a clear description of the gap arrangements for each insurer. The proper disclosure of an insurer’s gap arrangements is fundamental to providing consumers with an informed choice when selecting a policy, as gap arrangements may be a key differentiating factor when comparing hospital insurance policies," the report states.

The private health insurance industry has been under heavy scrutiny as of late, in large part due to rising premiums which have risen by an average of 52% since 2010 according to analysis from If current trends continue, finder predicts that by 2051, the average family will be spending 20.2% of their wages on health insurance.

This, plus high out-of-pocket expenses, has left consumers dissatisfied to say the least. According to the Commonwealth Ombudsman’s most recent annual report, complaints to the Private Health Insurance Ombudsman (PHIO) increased by 30% in 2016-17, the fourth straight year the rate of complaints has risen and the largest percentage increase in at least 10 years.

This negativity is having an effect. Research conducted in January by showed that 12% of those with private health insurance planned to discontinue their cover if their premium increased by more than 4% in April. The insurance industry may have skated by on that one with an average 3.95% increase, but the sentiment clearly exposes a deep dissatisfaction with the industry.

The government is already tackling some of the ACCC's concerns including transparency around out-of-pocket expenses, but they may want to step it up as some consumer advocacy groups are already raising alarms.

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