Business

Yoga out, mental health in: Sweeping reforms to private health insurance revealed

Australians under 30 will be offered discounts on private health insurance under a suite of reforms to the sector announced by federal health minister Greg Hunt.

Key points:

  • Discounts for young Australians to encourage them to get private cover
  • Broader private cover for mental health services
  • New categories of cover: gold, silver, bronze
  • Rebates for yoga, Pilates and other natural remedies cut off from govt. subsidies  
  • Reduced cost for prostheses like hip and knee replacements

Young Australians who sign up to private health cover will benefit from discounts on their premium under sweeping Turnbull government reforms designed to entice more young people into the system and slow the rising cost of health insurance.

Premium discounts will accrue by 2 percent for every year until a person turns 30, up to a maximum discount of 10 per cent.

Health minister Greg Hunt said the discount scheme would be a “very powerful financial incentive" for young people to take out private cover, announcing the reforms in Melbourne on Friday. 

Those who make use of the discount will keep their discounted rate until they turn 40, when it will be phased out. 

Labor's health shadow Catherine King said she doubted the incentive would be enough to convince young people struggling with a rising cost of living, and criticised the package for doing nothing to help older Australians, who "rely on private health insurance the most".  

Several students at the Australian National University told SBS World News they were still on their parents' plans. One described the discount as a "really good initative". 

But others said they would still struggle to pay for private cover. 

"I can't justify the expense. I never get sick. I'm not sick enough to justify it and the public healthcare in Australia is amazing," said ANU student Andrew Hall.  

Australians respond to sweeping reforms to health insurance
Australians respond to sweeping reforms to health insurance

Cutting 'natural' remedies 

The changes will also cut off government rebates for a range of homeopathic and so-called "natural" therapies, including reiki, reflexology, yoga and Pilates. Aromatherapy, herbalism, kinesiology, shiatsu and tai chi are also reportedly on the list.

Private insurers can still cover these items but they will no longer be eligible for Commonwealth subsidies.

Mr Hunt said the crackdown on natural therapies was the “right move” and was based on advice from the Chief Medical Officer.

Prosthetics deal to bring down costs

The government also said it had “struck an agreement” with the manufacturers of pacemakers and prosthetic hips and knees to reduce prices.

The government estimates it will reduce the amount of money private insurers spend on the devices by $1 billion over four years, and has promised to make sure the savings are passed on to consumers.

In exchange, Mr Hunt said the government would help manufacturers by giving them "faster access to the market" and “bring more devices on earlier”. He said the extra speed would benefit consumers who wanted to get their hands on the latest prosthetics. 

Private health insurance premiums have been steadily rising by around 5.6 percent every year from 2010. 

Mr Hunt said the package of reforms would bring prices down, but would not commit to a fixed percentage.

“I won’t put a figure on it today,” he told the ABC.

“We want to get the absolute lowest outcome.”

Mental health access

The government also said the private health cover reforms would make mental health services easier to access.

Customers will be able to upgrade to plans that cover mental health with “no waiting periods”, and basic private policies will include mental health cover as standard.

There will also be a new classification scheme to sort private health cover options into tiers of gold, silver, bronze and basic to simplify the choice for consumers.

Labor, Choice criticise lack of action on ‘junk’ policies

The Opposition has welcomed the move to reduce the prices of prosthetics, but described the reforms as “too-little-too-late” for failing to tackle so-called ‘junk’ policies.

These are low-cost policies that do not cover many treatment for many illnesses. The Australian Medical Association has called for the “junk” policies to be banned.

"The fact that the government has broken its election promise and retained junk policies remains concerning to me," Labor's health spokeswoman Catherine King said. 

"They are not worth the money and ... people need to be very wary of these products."

Consumer group CHOICE also criticised the lack of action on the budget policies.

“You’re going to be having a lot of young people buying policies that are worth very little to them,” CHOICE spokeswoman Erin Turner was quoted as saying in the New Daily. 

But Mr Hunt seemed to hit back at those criticisms, saying Labor was proposing a "terrible policy" that would be a "hammer blow" to private health insurance. 

He said scrapping cheap, basic levels of private cover would lead to longer waiting lists in public hospitals.