Private health reforms to deliver better value for money for fund members
The Federal Government will introduce measures to make private health funds more efficient and competitive, with the aim to deliver better value for money to fund members, the Minister for Health and Ageing, Senator Kay Patterson, announced today.
11 September 2002
Private health reforms to deliver better value for money for fund membersThe Federal Government will introduce measures to make private health funds more efficient and competitive, with the aim to deliver better value for money to fund members, the Minister for Health and Ageing, Senator Kay Patterson, announced today.
Under the new measures, health funds would be able to make annual automatic cost-of-living adjustments at or below the Consumer Price Index (CPI) to their premiums.
However, the Government would retain the right to deny any CPI increase if it was deemed not to be in the public interest.
Senator Patterson said safeguards would remain to ensure that any fund seeking a premium rise bigger than the annual CPI would be required to have its claim scrutinised every year by the industry's independent regulator, the Private Health Insurance Council (PHIAC).
"If the fund cannot justify its claim and it is not in the public interest, it would be disallowed," she said. "We will not rubber stamp premium increases which are higher than the annual rate of inflation.
"Tying funds' resources, time and effort into the expensive and protracted process of applying for below-CPI premium increases each year is wasteful.
"The funds' efforts will be better spent concentrating on delivering better products to members."
The changes approved by the Government will allow health funds to be more innovative and responsive to the needs of their members by streamlining the regulation of products.
Senator Patterson said funds would no longer have to seek approval from the Department of Health and Ageing for each product change.
"Funds will be free to make changes to their products. This is essentially a business decision on the part of management and the Government should not be involved in presiding over cumbersome regulatory processes," she said.
"We believe that streamlining the processes will drive efficiencies and deliver better value for money for fund members.
"We have tried to strike a balance to ensure a more competitive environment for the funds, while providing mechanisms to protect members."
Senator Patterson said members' interests would be protected by new measures, which included:
- The Private Health Insurance Ombudsman would be given increased powers to deal with complaints and resolve disputes.
- Health funds would face increased scrutiny of their overall performance on a number of key indicators - membership, management expense ratios, and reports from the Ombudsman on complaints.
- Each year the Ombudsman would present a "State of the Health Funds" report for consumers; it would contain information on how the funds were performing and how well they were serving their members.
- Fund members would find it easier to remember when they have to make a choice about private health insurance - in particular Lifetime Health Cover - by setting a notional annual "birthday" for Lifetime Health Cover arrangements
Senator Patterson said: "If funds fail to measure up on a broad range of indicators - most importantly meeting the needs of members - the Government will have the sanction to take away a funds' ability to allow its members up-front deductions for the 30% Private Health Rebate," she said.
"If the funds' performance is unsatisfactory, members would receive the rebate at the end of the tax year while being free to shop around for a better performing health fund."
Senator Patterson said the package would build on the success of the Government's private health insurance policies that had made private health insurance affordable for Australians.
"The fundamental objective of these reforms is to allow consumers to become a more effective force in the market by improving their ability to choose private health cover.
"The overall approach seeks to ensure we have a private health insurance system which is efficient, competitive, sustainable and giving taxpayers value for money."
Media Contact: Randal Markey, Media Adviser, 0417 694 520