Major reforms to private health insurance have been introduced, including a new classification system, which divides insurance into four distinct tiers.
Premiums will increase by an average of 3.25% per cent this year, which is above the rate of inflation, and more than wages growth.
Each year, when the cost of private health insurance goes up, people paying the premiums wonder whether it's worth it. Liz Brooke says she and her husband elect to maintain their cover.
About 7 years ago my husband had major back surgery so then it was worthwhile. So I guess it's always the take out insurance for the what if things happen. I guess on a monthly basis we probably don't really access it much. Little bit of chiropractic treatment here and there, the odd annual dental appointment so I don't know, it's one of those things where I like having it, I'd hate not to have it, but it's a huge expense and the fact that every year it keeps going up. I just wonder when is it going to stop.
Under the changes, each new private health insurance policy will be in one of four product tiers. Gold offers all 38 categories of hospital services, Silver covers 26 categories while Bronze covers 18 and Basic covers little if any.
The new classification system is designed to make it easier for people to see exactly what's covered and to find the right policy. Chief Executive of Roy Morgan Research Michele Levine says the changes come in an age when fewer Australians are taking out private health insurance.
"Roy Morgan's been monitoring how people feel about health insurance and whether they're taking it out for a while and what we're seeing is fewer people taking out private health insurance. They're seeing it as less relevant, less important to them and there's been an increasing number over the last four or five years saying that private health insurance is just too complicated to understand. So about 44 per cent of people with health insurance say it's just too complicated."
Under the reforms, there's no longer extras coverage for the following natural therapies: Aromatherapy, Western Herbalism, Kinesiology, Pilates, Shiatsu, Tai Chi and Yoga. The federal government hopes removing such cover will help to limit premium increases in the future. The Chief Executive of Private Healthcare Australia, Doctor Rachel David, says private cover represents value for money when compared to other forms of insurance.
86 cents in every dollar of premium income debts is paid out as benefits. That's higher than general insurance which is 62 cents and any other form of insurance is much lower than that again.
Michele Levine, from Roy Morgan Research, says the changes will make it easier for people to make more informed choices.
The fact that you have almost half the population taking out private health insurance says that there's still a feeling that they want to be comfortable, they want to feel assured that they can get into hospital, they can get their doctor. There are reasons people want to take their health into their own hands and I think what we'll see is that this government initiative, even though people at the moment aren't aware, I think that we'll see over time, as their decision making point comes when people decide to rollover their health fund, not do it or change, that's the time that it will become important for them and they'll see a benefit.
