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13 Nov 2019


Australia needs a strong and viable private health sector to maintain the reputation of our health system as one of the world’s best. Improving the value of private health insurance for consumers is vital for the continuation of private health care in Australia.

Purchasing private health insurance is a significant financial commitment for many consumers and achieving value for money is extremely important. Private health insurance should offer Australians greater choice in their doctors and location of their treatment and should deliver shorter waiting times for services.

However, private health insurance is one of the most complex forms of insurance and the current complexity of product offerings has led many consumers to report that they do not understand when they are covered, what they are covered for and why they have significant out-of-pocket costs but still pay thousands of dollars every year.

In the absence of quality information for our patients provided elsewhere, the AMA continues to provide leadership in health literacy, including financial literacy.

Our annual Private Health Insurance Report Card is a key component of this work. Through our report cards we strive to provide patients and consumers with clear, simple information about how health insurance really works.

The 2019 AMA Private Health Insurance Report Card explains what insurance may cover, what the Medicare Benefits Schedule (MBS) covers, and what an out-of-pocket fee can be under different scenarios. We also highlight the frustrating fact that what insurers pay varies significantly from across insurers, but even more concerningly from State to State within the same insurance fund.

To help consumers better understand what they are buying, we set out the percentage of hospital charges covered by State and insurer, and the percentage of services with no gap, State by State. The Report Card shows that some insurers perform well overall, and some only perform well for certain conditions.

Out-of-pocket costs are becoming a major issue for people contemplating either purchasing a policy for the first time or whether to relinquish their current insurance. Consequentially explaining how out-of-pocket costs arise in our health system is a major focus for this year’s Report Card.

The 2019 Report Card shows each insurer sets the rebate amount that they are willing to pay. If the insurer’s rebate is low, the out-of-pocket cost to their customer will be high. These insurer-caused out-of-pocket costs can vary by thousands of dollars.

The Report Card demonstrates how the same doctor performing the same procedure can be paid significantly different rates by each fund, this is often the untold story behind patient out-of-pocket costs, despite there being high levels of no gap and known gap billing statistics.

Following two years of deliberation by the Private Health Ministerial Advisory Committee, 2019 saw the Government implementation of the full suite of its reforms to private health insurance. Reforms that: developed clearer consumer communication; introduced standardised clinical definitions; and brought in the Gold, Silver, Bronze and Basic tiers of insurance.

Our Report Card this year includes a guide for patients about what the recent government reforms mean for them – how the reforms have impacted on their policies, their choices.

The complexity of private health insurance reduces the value to patients, through reducing transparency of benefit coverage, and choice of practitioner and timing of treatment.

Through this report, and in conjunction with our recently released guide – Informed Financial Consent: A Collaboration Between Doctors and Patients, the AMA aims to empower patients with important information to help them navigate their private health insurance policies, understand medical costs, and give them confidence to discuss and question fees with their health insurers and their doctors.

Published: 13 Nov 2019