Instances of private health insurers knocking back legitimate claims are indicators of Australia’s struggling, ad-hoc system, industry leaders say.
The Australian Consumer Competition and Consumer Commission announced on Tuesday it would be dragging Medibank to court, alleging the company’s budget provider, ahm, incorrectly told customers they were not eligible for certain benefits under their level of cover – when they actually were.
The consumer watchdog will allege Medibank incorrectly rejected claims or eligibility enquiries from more than 800 members for benefits they were paying for, commission chairman Rod Sims said in a statement on Tuesday.
It will be further put to the court that about 60 members needlessly upgraded their policies – meaning paid more – to access services they were already entitled to.
A confusing landscape
LaTrobe University Professor of Allied Health Karen Willis said it was hard to say if similar practices were widespread across Australia’s private health industry – but it was easy to see how it could happen.
“People experience private health insurance as being very complex, and (they don’t always understand) what they’re covered for,” Professor Willis told The New Daily.
She said her biggest concern with the set-up of the private health system was how the information was relayed between provider and consumer.
“We put the onus on the consumer to know what they’re getting, when it should be on the private health insurer to be transparent and clear about what’s being offered,” Professor Willis said.
She further called on the government to take a stronger hand in regulating the market, because of the subsidies offered by the government to health insurance companies.
This works through the Medicare Levy surcharge, which taxes from 1 per cent of income to be paid by singles who earn more than $90,000 a year, or families on more than $180,000 a year. Private health insurance holders don’t have to pay the levy.
“We tend to forget how closely linked the government and private health industry are – all taxpayers end up subsidising private health providers, it’s not just individual consumers paying out,” she said.
Symptoms of a greater disorder
The Grattan Institute’s Stephen Duckett said this was not the first case of the ACCC setting its sights on private health insurers. And it’s not likely to be the last.
The institute’s health director told The New Daily one of the strategies employed by insurers was to try and limit the benefits they paid out; a way of keeping they own finances afloat.
Earlier this year, the institute released a working paper that singled out two key areas where changes could be implemented by the government that would reduce costs for insurers, in turn creating lower costs for consumers.
“We think the Commonwealth over-rewards states for admitting private patients in public hospitals – and that is a cost to insurers,” Dr Duckett said.
He identified the field of prosthetics as another high-cost stinger to insurers’ bottom line.
While the government’s standardisation changes swept through the industry on April 1, Dr Duckett said there was still some work to be done to make the system clearer for providers and consumers.