Health insurance reforms explained and what they mean for HBF members

By Ella Rossanis

11 minutes

06 January 2020

Private Health Insurance Reforms

You’ve probably heard about the Australian Government’s reforms to health insurance, some of which came into effect on April 1 2019. Here are some things you should know.

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What are the reforms?

At the end of 2017, the Australian Government announced a series of changes to make private health insurance simpler and more affordable for Australians.

What’s changing?

There are a few key changes—some compulsory, some not. By April 1 2020, they will all be in effect.

Reform #1: Simplifying levels of Hospital cover – Compulsory

The government has introduced a new tiered system for naming and categorising hospital insurance products: The Gold, Silver, Bronze and Basic system.

Each tier has a minimum list of categories of hospital treatments and services that they must include (e.g. for a policy to be called “Gold”, it must cover all 38 categories of treatments and services). This means that as well as renaming their products, health funds may need to add or remove treatments and services from their existing products to fit into a higher or lower tier of cover.

Health funds can also choose to go above and beyond the government’s mandated list by including more categories in their products than the bare minimum required. If so, they can add a “plus” or “+” after the name of the cover, i.e. “Silver Plus”, to show that the product includes more than the minimum.

Why the government thinks it’s important: Until now, there has been no consistency across health funds with the way hospital policies—as well as the services and treatments within them—have been named and categorised, making it difficult for customers to compare funds and choose the right one for them. A structured, tiered system with consistent names, and a standard minimum list of included categories (as well as standardised definitions for hospital treatments and services - see Reform #2) will make it easier for customers to compare hospital insurance products.

What we’re doing to address it: We now have five Hospital cover options for sale which align to the new tiered system.

What it means for members: By now, affected HBF members would have received a letter or email outlining the impact of the reforms on their cover. These members will have started to notice changes from April 1 2019. It could be as simple as a name change, or some small differences in the list of included and excluded services.

Reform #2: Standardising categories of in-hospital treatment – Compulsory

The government has introduced a new standardised way of naming and categorising in-hospital treatments and services, which all health funds must use. The government refers to these categories as ‘Clinical Categories’.

Why the government thinks it’s important: Every health fund currently has their own way of naming the broad hospital treatment categories and organising the services and treatments that are covered within them. I.e. what we call the “Heart Treatment” category, and the services we include under it might be referred to as “Heart Procedures” by another health fund, with an entirely different list of included services. By standardising the categories and definitions of hospital treatments and services across all health funds, the hope is to clear up any confusion members may have around what is and isn’t covered in each category.

What we’re doing: We have already started to update our hospital treatment categories and the services listed within them to meet the government’s standard list of clinical categories and definitions. Since April 1 2019, our on-sale hospital products have used the updated terminology and reflect the new hospital treatment categories. By April 2020, we’ll be using updated terminology and categorisation across the board: on our website, in our membership guide, on the phone when members talk to our health insurance specialists, and everywhere else.

What it means for members: Affected members will be notified by letter or email outlining the changes to their cover. It may be as simple as a change in terminology, or a change to the list of included and excluded services.

Reform #3: Removing some natural therapies from Extras cover – Compulsory

Private health funds will no longer be able to offer benefits for the following natural therapies: Aromatherapy, Bowen therapy, Buteyko, Feldenkrais, Herbalism, Homeopathy, Iridology, Kinesiology, Naturopathy, Pilates, Reflexology, Rolfing, Shiatsu, Tai chi and Yoga.

Why the government thinks it’s important: After a review conducted by The National Health and Medical Research Council (NHMRC) to examine the effectiveness, safety and cost efficiency of 17 natural therapies, “no clear evidence demonstrating the efficacy of the listed natural therapies” was found. By removing them from private health insurance cover, the idea is to make sure that people are spending their money only on treatments that are proven to be effective.

What we’re doing: We’ve already made this change, and understand it might be difficult for some of our members and providers, but there is a silver lining. We’re always on the lookout for ways to keep our annual rate increase as low as we possibly can. Removing these natural therapies is just one of the reasons why, this year, we have been able to deliver the lowest premium increase of any health fund nationally­.

RELATED: Why do health insurance premiums go up every year?

What it means for members: Members can no longer claim benefits for the natural therapies mentioned above. We still cover Acupuncture, Traditional Chinese Medicine, Hypnotherapy, and Remedial Massage, so members should check their Extras cover to see what’s included.

Reform #4: Increasing maximum Hospital cover excess levels – Optional

Health funds can now increase the maximum excess they offer from $500 to $750 for singles and from $1000 to $1500 for families.

Why the government thinks it’s important: Offering price-conscious customers more excess choices will make it easier to find a health fund and level of cover that suits them.

What we’re doing: We’re now offering members the maximum excess option on all HBF Hospital products currently available for sale.

What it means for members: As of April 1 2019, members can reduce their premium by increasing their excess (if their Hospital cover includes that option).

Reform #5: Offering discounts for young Australians – Optional

Health funds can now offer 18 to 29 year-olds up to 10% off their hospital cover.

Why the government thinks it’s important: A youth discount will make Hospital cover more affordable and accessible to young Australians.

What we’re doing: We’re looking into the impact a change like this would have on all our members, not just our younger ones. We will never charge existing members higher premiums to offset the cost of a discount for younger members. We want customers under 30 to choose HBF because it’s the right cover for them, not because of any gimmick. These are just a couple of our considerations, but you can be sure that if we decide to offer this discount, it will be in a way that will benefit everyone.

What it means for members: Nothing at the moment. We’ll let members know if we decide to go ahead with this change. In the meantime, we encourage all our members to compare the price of their cover, and the services it includes, to other options out there. Discount or no discount, we want to make sure every member’s cover—and the value it offers—is right for their health needs.

Reform #6: Providing travel and accommodation benefits to rural members as part of their Hospital cover – Optional

Travel and Accommodation benefits apply when a member must travel a long way from home to access the medical or hospital treatment they need. In the past, most health funds would only cover these costs (like petrol, train and bus tickets or even airfares as well as hotel or motel accommodation) on the highest level of Extras cover. They can now be included in Hospital cover too.

Why the government thinks it’s important: By making Travel and Accommodation benefits claimable under Hospital insurance, the idea is to make Hospital cover more attractive for Australians living in remote areas.

What we’re doing: We’re looking into the impact a change like this would have on all our members, not just those living in rural or remote areas. We’re always exploring and reviewing our cover options, looking for ways to offer more value. If there’s a change that can benefit everyone, we’ll make it.

What it means for members: Nothing at the moment. We’ll let members know if we decide to go ahead with this change.

Other changes you should know about

There are a couple of other reforms that have already come into effect.

If a member’s Hospital insurance doesn’t offer full cover for in-hospital mental health treatment, they can now make a one-time upgrade to a product that does, without having to serve a waiting period. This change was made in April 2018 and means that anyone who needs immediate psychiatric care can get it.

The government is working on ways to reduce the cost of prosthetics since they account for 14 per cent of hospital benefits paid each year. This initiative will result in savings to health funds over the course of a 4-year period, which in turn will be passed onto customers through lower premium increases. This change came into effect in February 2018 and is ongoing through to 2021.

One final note to our providers

Our deadline for aligning to the reforms is April 2020, so any changes to our cover options will be made by then. By now, affected HBF members would have received a letter or email outlining the impact of the reforms on their cover.

If you have any further questions about how the reforms may affect you or your clients, our experienced HBF team are always happy to answer any questions you may have.

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