Private Health Insurance Reform Bills Forget to Help Consumers Make Informed Choices

The Australian Dental Association (ADA) urges the Australian Parliament to spend more time scrutinising the Private Health Insurance Bills currently before them to ensure that regulators are empowered to help consumers make informed choices about their private health insurance.

Yesterday in Parliament, the opposition in the House of Representatives raised concerns about the Private Health Insurance (Prudential Supervision) Bill and related bills. Under these Bills, from 1 July 2015, the Private Health Insurance Administration Council (PHIAC) will cease to exist as a separate body and its prudential and regulatory functions will be transferred to the Australian Prudential Regulation Authority (APRA).

What’s been overlooked is that PHIAC also provides statistical and financial data helping the over 13 million Australian policy holders make informed choices about which private health insurance product is right for them.

Dr Rick Olive AM RFD, President of the ADA, said: “While these Bills, on appearances, appear to be transferring the PHIAC’s prudential regulatory functions over to the APRA, there are critical obligations and functions that impact on the consumer that appear to not be carried over.

“There is nothing to suggest that the prudential standards proposed by the Bills include the function to collect and disseminate information about PHI to enable people to make informed choices. Will APRA be subject to an obligation similar to that imposed on PHIAC to provide members of the public with information to make informed choices about PHI? If not, which agency will be responsible for this important role?

“The PHIAC website has been the only easily accessible web site for consumers that provide an unbiased overview of historical data about the private health insurance industry. Information regarding rebates paid to consumers and any increases, or lack thereof, compared to the premiums paid for policies as well as the average amount of out-of-pocket costs consumers incur for health treatment. The existing bills do not appear to guarantee this.

“Markets only operate well for consumers if there is easily accessible and transparent information about the products available. Private health insurance has lacked adequate transparency in the details of policies for consumers, yet premiums continue to rise year after year. Whether or not the Australian Government likes more or less regulation, it must develop the right kind of regulation in the interests of consumers. Should the Bills as they stand pass, consumers stand to have even less information to help them make informed choices.

“We urge the Australian Parliament to heed the warnings we have provided in submissions and to take more time to scrutinise these bills and consider more evidence on the potential impact on consumers. These bills must be referred to a committee or be suitably amended”.