ELDERLY men are being sold health insurance that covers them for having a baby but not a hip replacement as private hospitals warn health fund exclusions have reached crisis point.
Taxpayers spend $6 billion a year subsidising private health insurance but the number of people who find their fund doesn’t cover their surgery has tripled in the last few years.
Just days after the consumer watchdog, the ACCC, set up an inquiry to put health funds through the wringer, a News Corp investigation has found many people are finding their health funds desert them when they need help.
Among the issues uncovered:
* 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.
* Insurers are changing the types of procedures covered by policies after they are taken out without properly informing members.
* Health funds are signing people up to products that are inappropriate for their needs.
* Health fund brokers like iselect and Compare the Market are driving up the cost of health insurance by charging commissions as high as $800.
* The private health insurance ombudsman received a total of 3427 complaints in 2013-14, a 16 per cent increase on complaints the previous year.
St Vincents Health Care which runs nine hospitals in NSW, QLD and Victoria says the problems have to be fixed to stop public hospitals being overloaded.
The hospital groups’ chief executive Toby Hall says his hospitals find a handful of people every day have to be turned away because their health fund does not cover the procedure they need.
“The scale of this issue is triple what it was in the past,” Hall says.
“It has become a regular thing, a few people a day are coming in either not understanding their cover or having being sold cover that is inappropriate.”
And he’s laying some of the blame on health fund brokers like iSelect and Compare the Market which are paid commissions to sign people up to products that turn out to be inappropriate.
Fifty-one-year-old Daren Robinson was told by insurance broker iSelect he could save $10 a month if he switched from AHM basic cover to HCF basic cover.
Last week he discovered while his old health fund would have covered the shoulder surgery he has booked for Monday, it is not covered by his new fund and he faces a bill for $9,500.
“I thought basic was basic, I thought I was getting the same deal,” he says.
Matt Cumming from iSelect said it always conducted a thorough analysis of a customers needs when selling insurance and would investiagte the case.
Mr Hall says a regulator needs to oversee health fund brokers, they need to be fined if they sign people up to inappropriate products and be evicted from the marketplace if it continues.
And he says health funds can’t continue to justify seven per cent annual premium rises if they continue to cut the procedures they pay for without informing their members.
Private Healthcare Australia chief Dr Michael Armitage says the problems caused by exclusions in health fund policies are a “direct result” of the previous Labor Government’s means test on private health insurance.
“It has led inevitably, as it was always going to, an increasing number of people under financial pressure taking out policies with exclusions or front end deductibles,” he said.
Some of the problems health fund members presenting to St Vincent’s have encountered include:
* An 88-year-old man had to be turned away from the hospital recently because his new health fund product covered him for having a baby but not a hip replacement or ophthalmology.
* A 43-year-old woman had to pay $3,300 for her sinus surgery after she found her health fund covered tonsils and adenoids but not sinus surgery.
* A 37-year-old found her private health insurance covered her for the procedure to identify her condition (a sigmoidoscope) but not the procedure to fix the problem (a fissurectomy). She paid out of her own pocket.
* A 32-year-old female requiring gynaecological procedure had to pay for her surgery because her fund classified it as obstetrics even though Medicare does not.
* Many women with breast cancer have found they are covered for a mastectomy, but not post-mastectomy cosmetic surgery.
Medibank chief George Saviddes has blamed health fund comparator websites for pushing up the price of health cover claiming they charged commissions worth as much as $800 per policy.
News Corp understands the commissions charged are around 30 per cent of the policy’s price.
Commissions paid to these websites are funded from the insurers’ advertising budgets, which reportedly rose $90m between 2007 and 2012, consumer group Choice reports.
Consumer group Choice reviewed comparison sites and says the businesses denied commissions are linked with their product recommendations, but warns “the potential for conflicts of interest is still pretty clear”.
Compare the market spokeswoman wouldn’t reveal the commissions her organisation charges but claims they are “only a low percentage” of the product price.
“The reason health funds participate is it’s a particularly cost effective was of acquiring new members, television advertising is really expensive,” she says.
Matt Cumming from iSelect agreed health cover affordability was becoming an issue but in the last year most of the 130,000 people his group helped were looking at health fund policy features.
Originally published as Health fund exclusions reach crisis point