1999-2000
Lifetime Health Cover
Funding of around $17.3 million over four years has been allocated for the implementation of the Lifetime Health Cover scheme.
Fact sheet9
Lifetime Health Cover
Ensuring Australia has a balanced health care system
The private health insurance industry is under pressure. Since the introduction of Medicare in 1985, the number of Australians with private health insurance has fallen. This drop in membership numbers has in turn created unsustainable pressure on the public health system through substantially increasing Medicare costs.
The Federal Government is determined to arrest this decline in private health insurance membership and ease the burden on public health. The main goal is to strike a better balance between the private and public sectors, ensuring Australians have a level of choice as well as universal access to excellent health care.
The Lifetime Health Cover scheme is part of a comprehensive strategy that has been devised to achieve this goal. While Lifetime Health Cover alone will not solve all of the problems associated with the private health insurance industry, in concert with other reforms like the 30% Rebate and loyalty bonuses, it will have a positive impact on membership numbers and consumer behaviour.
Lifetime Health Cover will help to minimise future premium increases by boosting membership numbers, helping to balance the age distribution of fund members and deterring 'hit and runs' (where someone takes out health cover for a certain procedure, then drops their cover). It was devised as a result of the Industry Commission's inquiry into private health insurance in early 1997 which recommended the introduction of an 'unfunded lifetime community rating' scheme.
Funding of around $17.3 million over four years has been allocated for the implementation of the Lifetime Health Cover scheme. A proportion of this funding will be used to implement an extensive education campaign to inform the Australian public about the scheme and how it will affect them.
How the scheme will work
Under Lifetime Health Cover, health funds will be required to set different premiums depending on the age when a member first takes out hospital cover with a registered health fund. The scheme is designed to encourage people to join a health fund early in life and maintain their membership. People who take out hospital cover by the time they are 30 and maintain their membership will pay lower premiums throughout their lifetime relative to people who delay joining.
People who join after the age of 30 will pay a two per cent premium loading for each year they delay joining. The loading is capped at a maximum of 70 per cent above the premium payable by a person who joins at the age of 30.
Existing members of health funds who have hospital cover, no matter what their age, will be treated as if they had joined a fund by the age of 30. A grace period of 12 months - from 1 July 1999 to 30 June 2000 - will be provided during which people who are not members can join a health fund and be treated as existing members, that is, as if they had joined when they were 30.
Special provisions apply to people who were born on or before 1 July 1934, that is, are aged 65 or more on 1 July 1999. People in this age group can take out hospital cover at any time in the future without paying a loading for joining late in life. If they choose to join a health fund at any time, they will pay the same premium as a 30 year old new member.
Top of page
| 1999-2000 $m | 2000-2001 $m | 2001-2002 $m | 2002-2003 $m | |
| Lifetime Health Cover | 12.3 | 2.0 | 1.7 | 1.4 |
Additional reforms - streamlining medical billing
Simplified billing is a Government initiative that addresses the problems of multiple bills and unforseen out-of-pocket costs after treatment as a private patient. This problem occurs when several doctors involved in a patient's care issue separate accounts, sometimes charging above the Medicare Benefits Schedule fee. Multiple bills and out-of-pocket costs are serious problems that influence consumers' perceptions of the value of private health insurance.
This Budget measure provides funds of $3.1 million over four years to promote the widespread up-take of simplified billing throughout the private health industry. It will develop electronic commerce and encourage private health funds to provide no-gaps and known-gaps products. This measure will also complement the Government's 30% rebate on private health insurance, while meeting the Prime Minister's commitment to deal with out-of-pocket private health care costs.
| 1999-2000 $m | 2000-2001 $m | 2001-2002 $m | 2002-2003 $m | |
| Simplified billing | 2.5 | 0.2 | 0.2 | 0.2 |
Private Health Insurance Ombudsman
The Private Health Insurance Ombudsman is an independent body resolving problems about private health insurance. The Ombudsman deals mainly with complaints about private health insurance arrangements between funds, hospitals, medical profession and fund contributors.
The costs of running the Ombudsman office is paid for by a levy on private health insurance funds. Each fund pays a part of the levy based on the number of their members.
The levy has been increased to $950,000 to ensure the Ombudsman continues to deal with the increasing demand for information and increasing requests for assistance from hospitals, the medical profession and fund contributors as consumer awareness of private health insurance initiatives increases.
Contact: Chris Woodgate, Assistant Secretary, Private Health Industry Branch, Portfolio Strategies Division, (02) 6289 8161
Top of page
