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About HBF

Price matters but what are you getting for your money?

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Why it doesn’t make sense comparing health funds and policies on price alone.

Right now we’re being bombarded by messages about health insurance.  “Switch now and save!”, “Are you paying too much for hospital insurance?”, “Could you be getting cheaper extras cover?” These are just a few of the increasingly frenzied messages from media commentators and the (not so independent) online comparison websites filling our inboxes and social media feeds.

And it’s not hard to see why the focus is on the cost of our health cover right now.

Private health insurance premiums are one the biggest outlays for the 55% of Australians who have health insurance, and on 1 April 2017 premiums went up by an average of 4.8%.

So it makes sense to check that the insurer you’re with, and the policy you’re paying for, are still right for you – and that you’re not paying more than you need to.

What doesn’t make sense is comparing health funds and policies on price alone.

You may only know how good your health insurance is when you make a claim. ‘Cheap’ hospital cover can suddenly look very expensive if you’re left with a big out out-of-pocket cost to pay the first time you use it.

The right way to compare health insurers

The good news is that there are truly independent comparisons of health funds that focus on the quality of the cover provided, not just the price tag.

Each year the Private Health Insurance Ombudsman puts health insurers under the microscope in its State of the Health Funds Report.

The Ombudsman’s report is designed to help Australians make an informed comparison of health insurers in each state and, in the report’s own words, “help you to decide which health funds to consider”. 

In a series of tables, the report compares the average percentage of hospital costs that are covered by each fund in each state. It also breaks down the average percentage of procedures which are fully covered so that members are left with no out-of-pocket to pay.

Additionally, it compares the average percentage of fees for services such as dental, optical and physio that members get back with their ‘extras’ health insurance.

The best part about this report is that it’s completely unbiased - unlike other comparison websites which will only recommend funds they have an agreement with.

The Australian Medical Association, representing Australia’s medical practitioners, also puts out its own report each year titled AMA Private Health Insurance Report Card.

The AMA’s report is based on the content in the State of the Health Funds Report (the tables comparing funds are the same) but has some additional commentary on the things consumers should look out for.

Because the data in the AMA report duplicates the Ombudsman’s report we’ll focus on the State of the Health Funds Report from here on. 

Why have you never heard of this before?

Unlike iSelect and Compare the Market, the Private Health Insurance Ombudsman doesn’t advertise its existence or the services it offers. It’s also not the most fancy/user friendly comparison tool out there. It’s a 38-page PDF that you must scroll through to get the meat out of.

To make matters easier for you, here’s a quick snapshot of key findings for the major funds in Western Australia.

Hospital services – just how well are you covered?

One thing that emerges from the State of the Health Funds Report is that in some states certain health funds have the edge.

In Western Australia, HBF consistently performs better than the average for the proportion of hospital charges covered and the average percentage of services where members have no gap to pay.

With hospital and medical costs running into the thousands of dollars, a small difference in the percentage of the costs paid by the insurer can mean a big difference in the out of pocket (or gap) payment the member will have to pay themselves. 

Health Fund

Percentage of hospital related charges covered in Western Australia1

BUPA

88.9%

HBF

95.9%

HCF

90.4%

Medibank

91.0%

Nib

82.9%


Health Fund

Percentage of hospital services with no gap for members in  Western Australia1

BUPA

71.2%

HBF

86.2%

HCF

77.1%

Medibank

77.5%

Nib

72.5%


1The information provided in this table presents an average percentage, taking account of all of each fund’s policies. It is not indicative of any individual policy offered by the fund but is an average for the total fund membership. (Private Health Insurance Ombudsman: State of the Health Funds Report, 2016)

NOTE: Includes charges for hospital accommodation, theatre costs, prostheses and specialist fees (not including the Medicare benefit) and associated benefits (after any excesses and co-payments are deducted).

How much of your Extras costs are covered?

The Report also compares the coverage of extras costs like dental, optical, physio and chiro services. For each insurer, the report provides an average percentage return for 13 different types of services as well as the overall amount in each state.

Health Fund

Percentage of general treatment (extras) charges covered in Western Australia1

BUPA

57.5%

HBF

57.3%

HCF

52.2%

Medibank

57.8%

Nib

59.9%


Average amount covered for different types of service1 

Dental

Optical

Physiotherapy

BUPA

54%

56%

51%

HBF

61%

55%

44%

HCF

55%

56%

43%

Medibank

52%

68%

50%

Nib

57%

54%

59%

1The information provided in this table presents an average percentage, taking account of all of each fund’s policies. It is not indicative of any individual policy offered by the fund but is an average for the total fund membership. (Private Health Insurance Ombudsman: State of the Health Funds Report, 2016)

There are a couple of other ways the State of the Health Funds Report compares health funds, and these can be pretty revealing.

Are the members complaining?

One of the Ombudsman’s most important roles is to investigate complaints by health fund members. As the Ombudsman points out in the State of the Health Funds Report, “The level of complaints that the Private Health Insurance Ombudsman receives about a fund, relative to its market share, is a reasonable indicator of the service performance of most funds.” 

The good news is, for every fund, the SOTHF Report sets out both that fund’s market share and their share of the total complaints received by the Ombudsman. And this is where it becomes clear that bigger does not necessarily mean better.

Medibank Private, one of the ‘big two’ health insurers in Australia, has 27.6% of the Australian health insurance market, but its members accounted for over 40% of all complains made to the Ombudsman.

By contrast, HBF has 8.0% of the market and its members accounted for just 3.3% of complaints.

 

Health Fund

Market share

Share of total complaints Ombudsman by members

BUPA

27.0%

21.7%

HBF

8.0%

3.3%

HCF

10.3%

10.6%

Medibank

27.6%

40.2%

Nib

8.1%

7.8%


Are members staying or moving on?

There’s one other tell-tale sign of how well or badly a fund looks after its members – whether those members choose to stay with their fund or go elsewhere.

As the Ombudsman says, “Whether a fund can attract new members and, more importantly, retain members is also an indicator of member satisfaction.”

There are striking differences in funds’ member retention. The best ‘open funds’ (funds whose membership is not restricted to certain professions) have retention rates in the 80s (ie 80% or more of their members choose to stay with that fund), while some funds’ member retention is in the low 60s. HBF’s retention is 88.1%.

Health Fund

Member retention (hospital cover)

BUPA

86.1%

HBF

88.1%

HCF

84.0%

Medibank

82.0%

Nib

79.9%

 

Choosing a health fund is a big decision. It’s a long term commitment and you’re choosing a health partner for yourself and your loved ones.

So if you’re shopping around for health cover or just wondering how your health fund measures up, talk to friends and family about their experiences, and take some time to go through the latest State of the Health Funds Report.

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