Top health insurance complaints

Each year, the Private Health Insurance Ombudsman (PHIO) releases an annual report detailing trends and issues in the Australian private health insurance market. Included in this report are figures and analysis of the complaints the PHIO receives regarding health insurance and private health funds.

In the most recent annual report for the 2017-18 period, the PHIO (which has now merged with the Office of the Commonwealth Ombudsman) received 4,553 complaints – down significantly from what was a record 5,750 complaints in 2016-17. So, what were the most complained about problems and how do they reflect on the Australian health insurance industry as a whole? Let’s take a closer look.

What’s in a complaint?

The PHIO’s role is to protect the interests of health insurance consumers. To this end, one of its key roles is dealing with complaints not only from health fund members but also from health funds, private hospitals, health insurance brokers and medical practitioners.

According to the PHIO, a complaint “must be an expression of dissatisfaction with a matter arising out of or connected with a private health insurance arrangement”.

Number of complaints each year since 1990-2000

The table below shows the number of complaints received since 1999-2000. The large jump in the number of complaints in the 2000-01 year reflects the increased number of Australians who took out private health insurance cover following the introduction of the government’s private health insurance rebate and the Lifetime Health Cover scheme.

Complaint levels then dropped slightly over the next few years, thanks largely to increased awareness of annual health insurance premium increases and improvements in complaint-handling processes across the health insurance industry.

Complaint numbers remained relatively steady for the best part of a decade, until 2013-14 when the 4,265 complaints received represented a jump of 24% on the previous year.

What’s caused the recent rise in health insurance complaints?

There is no single issue that has prompted the spike in complaints to the Ombudsman in the past few years. Instead, there are multiple issues and developments at play.

One of the key concerns among health fund members is the annual premium increase on 1 April each year. Over the 2010-17 period, Australian health funds have increased their premiums by an average of more than 44% and the cost of private health insurance is a constant topic of complaints received.

Another reason for this spike is a rise in what are sometimes referred to as “junk” policies. Most health funds offer entry-level hospital cover policies that only provide a basic level of cover. However, some consumers are unaware of the restrictions and exclusions that apply to their policy and often get a nasty surprise when they are hospitalised and find out that their health fund won’t offer any cover.

It’s also worth pointing out that the number of Australians who have private health insurance cover has increased in recent years. Figures from the Private Health Insurance Administration Council reveal that:

• On 31 December 2009, 9,866,201 Australians had hospital cover and 11,362,705 had extras cover
• On 30 June 2018, 11,259,263 had hospital cover and 13,543,193 had extras cover

However, for a better understanding of the driving forces behind increased complaint numbers, let’s take a look at the most commonly complained about issues across the health insurance industry.

What are the most common health insurance complaints?

The most common private health insurance complaints during 2017-18 were:

Benefits: 1,641 complaints

The largest area of complaint was the benefits paid by private health funds. This was headlined by hospital and extras policies with unexpected exclusions and restrictions. Basic and budget levels of cover often restrict or exclude services that many fund members assume will be included in cover as they are routine treatments.

Delayed benefit payments, fund rules that limited the benefit amount payable and failure of policies to cover the medical gap were other common concerns.

Membership: 867 complaints

Complaints involving health fund membership generally concern delays or issues in funds processing policy cancellations as well as funds cancelling memberships when premium payments are in arrears.

Another significant cause for complaint was delays in issuing clearance certificates required by consumers to switch from one health fund to another.

Service: 675 complaints

Complaints about service issues tend to arise as a result of other complaints. These include issues such as poor customer service, funds being too slow to rectify simple issues, problems paying premiums and unsatisfactory internal processes for dealing with complaints.

Information: 476 complaints

The majority of information-related complaints arise due to disputes or misunderstandings about oral advice provided by a fund. Complaints about the verbal advice a consumer received can also be quite complex and difficult to process, especially if the fund doesn’t keep a recording of the conversation that took place.

Waiting periods: 475 complaints

Health funds can impose a 12-month waiting period on treatments for pre-existing conditions, and disputes around what constitutes a pre-existing condition and how this waiting period is applied were a common cause for complaints in 2017–18.

Incentives: 241 complaints

Incentives received 241 complaints in 2017-18, with the majority (206) having to do with the Lifetime Health Cover (LHC) loading. Other complaints included the Medicare Levy Surcharge (MLS) and the Private Health Insurance Rebate.

Who was complained about?

In the 2017-18 financial year, complaints about health funds dominated the statistics, making up a whopping 85% (3,874 complaints) of all complaints received. Complaints about overseas visitors funds came next with 9.7% (441), followed by health insurance brokers with 1.8% (83), hospitals 1.3% (57) and healthcare practitioners 0.6% (25).

As the table below shows, the most complained about health funds also tend to have the largest market share.

Top 5 most complained about health funds in 2017-18

What should I do if I have a complaint?

Before contacting the PHIO, you should contact your health fund to try to resolve your complaint. If no resolution is reached or you’re unhappy with their response, you can make a complaint to the Commonwealth Ombudsman in the following ways:

• By phone. The complaints number is 1300 362 072 and the office is staffed from 9am to 5pm Monday to Friday (AEST).
• Online. An online complaints form can be accessed through the Ombudsman’s website.
• By post. You can post your complaint to Commonwealth Ombudsman, GPO Box 442, Canberra ACT 2601.

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