Is your health fund misleading you?

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Details disclosed … the consumer watchdog has revealed the many ways your health fund misleads you. Picture: iStock

 

IF you think your health fund covers you for dental, mental, gynaecology or ambulance services you probably haven’t read the fine print.

The consumer watchdog has called for sweeping changes to private health cover warning health funds are at risk of breaking the law with misleading claims about 100 per cent cover.

The Australian Competition and Consumer Commission (ACCC) has launched a major inquiry into the sector as it raises the alarm over secret changes to health fund benefits that diminish the value of the insurance.

In a report to the Senate it says there is market failure in the sector with health fund policies so complex consumers can’t work out the best deal and can be caught out with huge out of pocket expenses as a result.

It wants the rules changed to require health funds to notify members when they change conditions that would affect the provider’s consumers can use or increase consumers’ out of pocket expenses.

Many health funds are secretly changing the rebates they pay or the services they cover without informing members and the current law lets them get away with this the ACCC says.

And it says it’s been alerted to conduct by some insurers who claim to provide 100 per cent cover but then have so many qualifications in the fine print they are in danger of breaching the Australian Consumer Law (ACL).

“In line with the ACCC’s current focus on the health and medical sector, the ACCC will be closely reviewing some practices in the health insurance industry to address concerns regarding incomplete policy information that are not only confusing but also misleading,” ACCC Deputy Chair Delia Rickard said.

The private health insurance ombudsman received a total of 3427 complaints in 2013-14 representing a 16 per cent increase on complaints the previous year underlining major problems in the sector.

More than half of all health fund members now have policies that include one or more restrictions on treatments like joint replacement, cardiac surgery or other treatments.

And this means despite taxpayers spending over $5 billion a year subsidising insurance many people end up using public hospitals or paying the bill themselves.

The ACCC says one fund member bought a policy that covered her for day surgery in a private hospital and underwent gynaecological surgery.

After the surgery Ms C discovered that her insurer defined her surgery as ‘obstetrics’, which was excluded from her policy even though Medicare confirmed it did not classify the procedure as obstetrics related.

Many fund members may think they are covered for ambulance costs but aren’t, the watchdog says.

Comprehensive cover for ambulance may mean emergency transport to a hospital but not between hospitals, emergency transport to a hospital but not for a call-out that does not result in transport to hospital, emergency transport to hospital but not between public hospitals and/or only between a private hospital and another hospital if written medical advice is provided.

The report reveals one in four consumers who used their insurance experienced at least one occasion where they were dissatisfied with the payout or believed they were covered for something that they were not.

Over 11 million Australian consumers have health insurance and government tax and age penalties force people to take out cover.

But consumers are bamboozled and confused by the more than 20,000 private health insurance policies on offer and don’t get enough information to pick the best deal the ACCC says.

They are not aware comparator websites like iselect and compare the market don’t cover all their options and exclude the nation’s biggest insurer Medibank.

Nor do they realise the agents who work for these comparator website get paid a commission by the health funds on their website.

The ACCC said it received one submission which said the commission-based structure means comparator website operators have incentives to entice fund members to switching in instances where it is not necessarily in the best interests of the consumer.

The watchdog has called for the government to improve the information and comparison tool on its Private Health.gov.au website

It wants terminology around terms such as ‘known gap’ and ‘no gap’ policies, top, medium or low cover standardised so it is clear what the inclusions and exclusions of policies

It wants the minimum policy coverage requirements reviewed given the growth of restrictions and exclusions.

And says triggers for requiring insurers to inform consumers about any changes that may affect their out-of-pocket expenses or choice of hospital or practitioner should be reviewed.