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11 Apr 2018

Australians are fast losing faith in the private health insurance industry, according to a new independent survey.

The Roy Morgan Private Health Insurance Net Trust Score Report has found Australians now rate the PHI industry at the same level as gambling and real estate.

The survey recorded a negative Net Trust Score (NTS) of -2.6 per cent.
Roy Morgan Research Institute chief executive officer, Michele Levine, said the level of distrust is unexpected, given the highly trusted health system it operates in.

“There is no doubt that when a patient has to pay an unexpected gap at a doctor’s surgery or hospital, they do not blame the health professionals, they blame their private health fund,” Ms Levine said.
“The customer places their trust in the insurer; should they need to make a claim, they trust the insurer to fulfil its policy obligations. So, this level of industry distrust should be of concern to the funds.”
Roy Morgan asked more than 2800 people which brands they trust and which they distrust, in three rounds of surveys between October 2017 and February 2018. In March 2018, they asked a further 1600 people which private health insurance brands they trust and distrust.
“When we subtract distrust from trust, we discover that the private health insurance funds with the highest net trust scores are HCF, Teachers Health, and Medibank Private,” Ms Levine said.

 “There is only one fund in negative NTS territory, and that is Bupa.”

The survey results come as the AMA Federal Council passed two motions against Bupa over plans to change to its policies and coverage.

Meeting in Canberra on Friday March 16, the Federal Council held lengthy discussions about Bupa’s recent announcement to rework its medical gap scheme.

A third of Bupa’s Australian customers were told their cover for a range of procedures will change from a minimal benefit to total exclusion. 

And patients would only qualify for gap cover if treated in Bupa-approved facilities.

Bupa softened its position slightly after the AMA sharply condemned the announcement, but the AMA believes the move is still far too harsh and is heading towards a US-style managed care system.

It formally rebuked the private insurer with the following two motions: 

  1. “Federal Council expresses its concern at recent changes to health insurance products announced by Bupa.  These changes threaten member choice and access to health care.  Federal Council calls on Bupa to reconsider these changes and to act in the interests of its members and the broader Australian community.”
  2. “That Federal Council recommends that the AMA advises Australian citizens how they can change their private health insurance.”

The AMA has already forced an investigation into Bupa, after AMA President Dr Michael Gannon called on the Government to look into the legality of the private insurer’s move.

Federal Health Minster Greg Hunt subsequently ordered the Private Health Insurance Ombudsman to do exactly that.

The punitive changes were announced just weeks after Mr Hunt approved a 3.95 per cent increase to private health insurance premiums.

“The fact that the change has occurred straight after a premium increase, straight after agreement was made to retain second tier rates for non-contracted facilities, and straight after an announcement by Government to work collaboratively with the sector on the issue of out-of-pocket costs, is unconscionable,” Dr Gannon said.

"The AMA will not stand by and let Bupa, or any insurer, take this big leap towards US-style managed care.

“The care that Australian patients receive will not be dictated by a big multinational with a plan for vertical integration.”

Shortly after 3.95 per cent PHI premium increases kicked in, Opposition Leader Bill Shorten accused the private health insurers of “running amok”.

“That’s why Labor has a policy that we will cap the increases at no greater than 2 per cent for the first two years if we get elected,” he said.

Mr Shorten refused to rule out changing the private health insurance rebate scheme; saying only that he would look at it once in office.

AMA Report Card on PHI

The AMA has itself revealed the best and worst of PHI coverage, with the release of its AMA Private Health Insurance Report Card 2018.

The Report Card is a timely reminder that private health insurance consumers should shop around.

In releasing the Report Card, Dr Gannon warned that changes being implemented by Bupa and pursued by some other health insurers will reduce patient choice of doctor and hospital.

And they will leave policy holders questioning the value of their significant investment in private health insurance, he said.

“The big insurers are pursuing a US-style managed care agenda to save costs and further increase profits by making it harder for patients to receive care from the doctor they want in the most appropriate hospital for their condition,” Dr Gannon said.

“Bupa’s new arrangements, which only provide maximum benefits for patients in hospitals with Bupa contracts, undermine the role of the doctor in providing and advising the most appropriate care – and could ultimately drive up out of pocket costs for patients.

“Public confidence in private health insurance is already at an all-time low. These changes will further devalue policies, which are a major financial burden for Australian families, and will place dangerous pressure on the already stressed public hospital system.”

The Report Card provides an overview of how private health insurance should work to benefit patients, and explains how proposed new arrangements will result in less choice and value for policy holders.

It shows that there are a lot of policies on offer that provide significantly varying levels of benefits, cover, and gaps.

“There are also a lot of policies on the market that will not provide the cover that consumers expect when they need it,” Dr Gannon said.

“If people have one of these ‘junk policies’, they should consider carefully what cover they really need.

“The Government has undertaken some important reforms to private health insurance to help people understand the different conditions that each policy category – gold, silver, bronze, and basic – will cover.

“The funds must not be allowed to sabotage these reforms.”

The Report Card shows that some insurers perform well overall, and some only perform well for certain conditions.

It reveals that the same doctor performing the same procedure can be paid significantly different rates by each fund, which is often the untold story behind patient out of pocket costs, despite there being high levels of no-gap and known gap billing statistics.

The latest APRA statistics show an overall no-gap rate of 88.1 per cent and a known gap rate of 7.3 per cent.

Dr Gannon said the medical profession is working hard to ensure patients receive value for money.

“Our Report Card shows that the profits of the insurers continue to rise, the growth of policies with exclusions continues to grow, and policy holder complaints continue to rise,” he said.

“We explain what insurance may cover, what the Medicare Benefits Schedule (MBS) covers, and what an out of pocket fee may be under different scenarios. 

“We also highlight the frustrating fact that what an insurer pays can vary from State to State – even within the same 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.

“There is also a breakdown of the complaints received by provider and organisation, which shows that the number of private insurance complaints are significant, and on the rise.”

The data in the AMA Private Health Insurance Report Card 2018 is publicly available – drawn primarily from the Australian Prudential Regulation Authority (APRA), the Private Health Insurance Ombudsman, and the insurers’ own websites.

The AMA Private Health Insurance Report Card 2018 is at:

 The Roy Morgan Private Health Insurance Net Trust Score Report is at:



PICTURE: AMA Federal Council passing motions condemning the Bupa changes.


Published: 11 Apr 2018