Some of Australia’s biggest private health insurance providers have been named and shamed by the consumer advocacy group Choice for offering useless “junk” products.
Medibank, HCF and NIB were among those named by Choice on Tuesday for offering policies it said were a waste of money, with little benefit above what is provided through Medicare.
A Choice spokesman, Tom Godfrey, said: “Our analysis shows that, in many cases, junk policies cover less than 1% of the services available in hospital and exclude treatment for the most common serious illnesses such as cancer, stroke and heart disease.
“It’s particularly concerning that some health funds boast about the popularity of these ‘junk’ policies, knowing full well they offer inadequate coverage.”
Godfrey said it was “ludicrous” that people paid thousands of dollars for poor policies to avoid incurring government surcharges, yet still had to turn to the public system when they got sick.
Private health insurance premiums are set to rise by an industry average of 5.59% in the next few days as part of the customary annual review.
The hospital policies Choice criticised for covering a very small number of procedures included:
- Australian Unity basic hospital – annual premium from $1,500 to $2,260
- Defence Health essentials hospital – from $1,475 to $2,210
- HIF gold vital – from $1,090 to $1,700
- Medibank young hospital – from $1,235 to $2,410
- NIB basic hospital – from $1,540 to $2,060
Private hospital policies that cover accident and ambulance only:
- HCF accident hospital only cover – from $770 to $2,140
- Medibank accident cover – from $1,190 to $2,310
In many cases, policies were marketed in ways that would lead consumers to expect greater coverage than was the case, Godfrey said.
Choice called for the federal government to reconsider the eligibility of such insurance policies for the private health insurance rebate or exemption from the Medicare levy surcharge and the lifetime health cover surcharge.
“We’d like to see the government model the impacts of trashing ‘junk’ policies on the consumer and health insurance market,” Godfrey said.
NIB said it was transparent with its customers about what was included in its policies and that its basic hospital cover was a great option for people looking for an affordable level of cover.
A spokeswoman, Kyla Banks, said: “Taking out a basic cover also allows customers to eventually take out a higher cover when their life circumstances dictate, without the burden of lifetime health cover loading and tax implications.”
HCF’s managing director, Shaun Larkin, said the fund’s Accident Only cover is available on request but is not a policy that it actively markets to customers.
“We provide health insurance on a personal needs basis – not price,” he said.
“It’s worth noting that in CHOICE magazine’s March issue, HCF’s Premium Hospital and Basic Hospital policies were rated top performers in their categories; policies that we do actively promote to consumers.”
Medibank has been contacted for comment.
Australian Associated Press contributed to this report
