Health insurance reforms explained and what they mean for your health cover


11 minutes

06 January 2020

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On 1 April 2020, the Australian Government's reforms to health insurance officially kicked in. Here’s a few things you should know.

At the end of 2017, the Australian Government announced plans to shake up the private health insurance (PHI) industry for the first time in 20 years with some changes designed to make health insurance a little easier to grasp, and a little easier on the wallet too.

There are a few key changes—some optional, some not.

While some health funds, like HBF, have already started to make some changes, all health funds have until 1 April 2020 to fully align to the reforms.

This article will help you understand what's changing, why the government thinks that change is important, and what that change means for your health insurance.

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Reform #1: Standardising categories of in-hospital treatment - Compulsory

The government introduced a new standardised way of naming and categorising in-hospital treatments, which all health funds must use. Each clinical category has a specific list of hospital treatments which must be included in that category.

*Tip: ‘Clinical categories’ is the term the government has given to the broad categories of treatments and services outlined in your policy. ‘Clinical definitions’ are the specific hospital treatments within each category.

Why the government thinks it’s important: Every health fund had their own way of naming the hospital treatment categories and organising the treatments that are covered within them. For example, what we called the “cardiac related services” category, and the treatments we included under it might have been referred to as “heart procedures” by another health fund, with a different list of included treatments. By standardising the categories and definitions of hospital treatments across all health funds, the hope is to clear up any confusion customers may have around what is and isn’t covered in each category. This means all treatments under a clinical category must be included or excluded. As you cannot have partial coverage for a clinical category, many health funds changed their existing products in order to align.

What we’ve done: We have updated our hospital treatment categories and the treatments listed within them to meet the government’s standard list of clinical categories and definitions.

Reform #2: Simplifying levels of hospital cover – Compulsory

The government 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 clinical categories that must be included (e.g. for a policy to be called ‘Gold’, it must cover all 38 clinical categories). This means that as well as renaming their products, some health funds may choose to make changes to their products to match these tiers.

Health funds can also choose to include more clinical categories to their products than the Government’s minimum requirement for a tier. If so, there is the option to add a “plus” or “+” after the name of the cover, i.e. “Bronze Hospital Plus”, to show that the product includes more than the minimum clinical categories requirement for a ‘Bronze’ level of cover, however has not met the minimum requirement for a ‘Silver’ tier.

*Tip: As the highest tier of cover, ‘Gold’ includes all 38 clinical categories, which means that ‘Gold Plus’ cover cannot exist.

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 pretty tough for customers to compare funds and choose the right cover for them. A structured, tiered system with consistent names, and a standard minimum list of included clinical categories (as well as standardised definitions for hospital treatments see Reform #1) will make it easier for customers to compare the covers they need. However, it’s important to note that not all health covers in the market will be the same, particularly if they are a “plus” product.

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

Private health funds are no longer be able to offer benefits for the following natural therapies: Alexander technique, aromatherapy, Bowen therapy, Buteyko, Feldenkrais, western herbalism, homeopathy, iridology, kinesiology, naturopathy, Pilates, reflexology, Rolfing, shiatsu, tai chi and yoga.

*Tip: Natural therapies (we also refer to them as ‘alternative therapies’) are holistic treatments, designed to help stimulate the body’s self-healing response through physical and emotional wellbeing, instead of conventional western drugs or medication.

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 therapies1” was found. By removing them from private health insurance cover, the idea is to make sure that people are seeking medical treatments that are proven to be effective.

What it means for your cover: You are no longer able to claim benefits for the natural therapies mentioned above (and you won’t be able to find another health fund where you can). We still cover acupuncture, traditional Chinese medicine, hypnotherapy, myotherapy and remedial massage so make sure to check your 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 and couples.

*Tip: An excess is the amount you agree to pay upfront before you receive hospital treatment and you decide on this amount when you buy your health insurance. Generally, the higher your excess, the lower your premiums, which is why some members choose to pay one. The trade-off is that if you do end up in hospital­, and you have chosen an excess to lower your premiums, you’ll need to pay it upfront.

Why the government thinks it’s important: Offering members the option of a higher excess in order to reduce their premium could make health insurance more affordable for those who are less likely to make a claim.

What we’ve done: All of our 5 hospital cover options for sale now have the maximum excess level available.

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 your cover: Nothing at the moment. We’ll let you 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, make sure your cover—and the value it offers—is right for you and your 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 higher levels 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, you can be sure that we’ll make it.

*Tip: Did you know that we already cover the cost of accommodation and meals for a loved one staying with you while you’re in a Member Plus hospital? If you have HBF hospital cover, you’ll be able to claim for the cost of a hospital boarder as long as they are integral in managing your condition, the service you’re receiving is included on your cover, and hospital boarders are an agreed service with your chosen hospital.

What it means for your cover: Again, nothing at the moment. We’ll let you know if we decide to go ahead with this change.

Other changes you should know about

If your hospital cover has limited benefits for Hospital psychiatric services, you can now make a one-time upgrade to a cover with higher benefits without having to serve the 2-month waiting period, provided you have held hospital cover for at least 2 months. This change was made in April 2018 and means that anyone who needs immediate in-hospital psychiatric care can get it. Please contact HBF for more information.

The Private Health Insurance Ombudsman (PHIO) was given more power throughout 2019, allowing them to conduct more-thorough investigations to solve more consumer complaints. Changes allow the ombudsman to conduct inspections, audits and have full access to insurer's records and supplementary records such as phone calls, emails and letters. The ombudsman will receive additional staff to increase their capacity to investigate complaints.

One final note to our members

Change is happening, but our mission at HBF remains the same: to deliver quality health insurance at an affordable price. As a not-for-profit health fund, we have no shareholders to pay. This means that the only people we answer to are our members, and we'll always put you first.

At HBF, all of our cover options are in full compliance with the reforms. Take a look at our product suite and if you like what you see, give us a call.

Remember that we are just a phone call away and are always happy to answer any questions you may have, reforms or otherwise.


1 Department of Health - Changing cover for some natural therapies (2019)