Low priced private health insurance products

Page last updated: 02 November 2017

Low priced products have an important part to play in our community-rated private health insurance system. They can be important for people living in rural and regional areas, and provide choice for Australians who do not need comprehensive products. Younger people may purchase low priced products to avoid paying the loading, and retain the option to upgrade their cover at a later date.

Importantly, all private hospital insurance contributes to the Risk Equalisation Pool, which supports community rating and helps to keep private health insurance affordable for all policyholders.

Some people have suggested that the system would be improved if low priced products were abolished. The Private Health Ministerial Advisory Committee considered the role of low priced products, including modelling of the impact of removing low priced products. Modelling found that removing low priced products would increase premiums and reduce the number of people covered by private health insurance.

Affordability is a major consideration for consumers. The Government is committed to keeping premiums as low as possible. Large premium increases due to changing regulation would be unacceptable, so the Government has decided to maintain the current minimum product standards.

On 13 October 2017, the Government announced a package of reforms designed to make private health insurance simpler and more affordable. As part of this package, the Government has announced new reforms to make private health insurance easier to understand, so that people understand what they are and are not covered for. These reforms include:

  • The introduction of Gold, Silver, Bronze and Basic categories, and standard clinical definitions, for all private health insurance products;
  • Upgrading the privatehealth.gov.au website; and
  • Improving the powers and resources of the Private Health Insurance Ombudsman.

More information about the reforms is available on the Department of Health website.