New health cover system could exclude treatments key to older Aussies

The government rightly wants to make heath insurance products easier to understand, to stop the rapid recline in the number of Aussies willing or able to take out or maintain cover.

But an issues paper issued by the Health Department and reported by the Daily Telegraph appears to show that under a simplified system – products are categorised as gold, silver, bronze and basic depending on their level of coverage – treatments that are vital to many older Australians would be excluded even from the silver category of health insurance.

The paper makes the point that the minimum requirements for each category won’t be finalised until later this year in consultation with the health insurance industry that’s due to happen this month, but says that these are “draft minimum product requirements”. The changes themselves wouldn’t come in until April 1, 2019.

“The Commonwealth Rules that give effect to the new product categories will set minimum coverage requirements for products,” the paper says. “Insurers will not be able to use the terms Gold, Silver or Bronze (or similar, e.g. Platinum) on products unless they meet the minimum coverage requirements set out in these Rules.”

But the exclusions from even the second-highest class of cover are substantial, and include hospital treatment for heart and heat-related conditions and services, vascular and vascular-related conditions and services, eye and eye-related conditions and services, cataract procedures, joint replacements, hearing loss surgery and dialysis for chronic kidney disease.

The bronze category, also cuts out treatment for lung and lung-related conditions and services, back, neck and spine treatments, kidney and bladder treatments, surgery for skin lesions, dental surgery, podiatric surgery and management for chronic pain, among other items.

The bronze, silver and gold categories all have cover for chemotherapy and radiotherapy for cancer.

These conditions and services would all be covered under the gold category, but the Daily Telegraph reports that under the current system – insurers have products that are called gold, silver, bronze and basic but aren’t standardised across the industry – many of these treatments are covered under a silver product. Upgrading from silver to gold can cost between $300 and $500 more each year, which the newspaper says means existing customers would pay more for the same cover under the new system.

Health insurance premium rises have long outstripped inflation and even this year’s expected 3.95 per cent increase is considered too high by many consumers for products that have increasing numbers of exclusions. Last year’s increase, at 4.8 per cent, was the lowest in 10 years after the health department reformed the treatment of some medical prosthetics, but was still double the rate of inflation. Australia’s had 1.9 per cent inflation in the most recent reading.

Health Minister Greg Hunt warned last year that the health cover sector was on the brink of catastrophe, with customers dropping or downgrading their policies at a rapid rate. When this happened in the 1990s, huge pressure was put on the public health system. 

A department spokesman said that the definitions of the product categories set out in the issues paper had previously revealed and no final decision had been taken on what treatments would be included. Starts at 60 has sought a comment directly from the department.

Many insurers have also been criticised for selling “junk” basic cover that actually covers next to nothing, and the Australian Medical Association has urged the government to ban such products, but the issues paper includes basic as a category. Under the draft minimum product guidelines for hospital treatment, a basic policy must cover only rehabilitation, mental health services, services for drug and alcohol-related issues and palliative care.

Have you downgraded or dropped your cover because of price rises or exclusions? Are you confident that your health insurance will cover you for the treatments most important to you?