CHOICE membership

April 1 - and Health Fund Prices Soar


#1

It is fitting the annual health funds increases start on 1 April. As I posted about HCI my annual increase was 13.4%, more than triple the headline 3.95% average, although it started on the low end.

It is obvious but bears repeating, a temporary ‘defence’ for those getting a big slug is for those so able to pay annually in advance before the 1 April increase kicks in.

More obviously it reinforces that shoppers (for anything) should never rely on averages, headlines, or comparisons that are by necessity a distillation of many factors, without checking into all the relevant details.


#2

Privatise they said… It will make it more competitive, better for the consumer they said… :expressionless:


#3

If anyone wants to shop around for a new/alternative health insurance provider, Choice has a health insurance comparison website (note: member’s content - check currency of prices post April 2018 before finalising decision):


#4

HCI is non-profit as is GMHBA, and Medibank is for-profit. The different levels of ‘selling it’ via the reports is interesting, as is what GMHBA does with some of its non-profit dollars (eg Cats sponsorship).


#5

It should be noted that the 2018 prices are not going to be reflected by the funds until 1 April, so what you see now can be grossly misleading unless you pay annually before 1 April, although one can ask each fund directly.


#6

And Medibank’s “reward program for long-term customers”… “The bonus will be paid by increasing extras limits on services such as physiotherapy.” I should have become a physiotherapist.
Private health insurance reminds me a lot of Foxtel… you get all the stuff you used to be able to get with public access but must pay extra for anything actually useful.


#7

RT Health has a 9% increase to it’s top policy. Not as bad as your’s but still way above the 3.95%, plus the rebate was cut by a small percentage point.

[quote=“phbriggs2000, post:3, topic:15151”]
If anyone wants to shop around for a new/alternative health insurance provider, Choice has a health insurance comparison website
[/quote] This is a Choice Members one and if not a member requires a payment starting at $19.95 to access it, the Federal Govt have a free one at https://www.privatehealth.gov.au/ if you aren’t a member of Choice, can’t afford it or don’t wish to pay. The Fed Govt one may not be as good as Choice’s but as I am not a member I am unable to compare the results.

If the average is 3.95% where are the policies that didn’t go up and had smaller increases that brings the average down to this figure??? I haven’t seen one yet but they must be out there to get this result OR is it a Con/Furphy/Lie?


#8

I’d just like to point out that paying before 1 April and in full does not avoid the increased charges. It merely delays the increase for 12 months. When 1 April 2019 rolls round you will end up paying the 2018 price by which time the insurance companies will have again raised prices and reduced cover further. So effectively you are 12 months behind in price hikes but on par with benefit reductions. Moral? Always check before renewing!

And another word of warning. I actually did make the early payment one year only to have my health coverage re-dated to 1 April. This meant I ‘lost’ about 6 weeks cover on the ‘old’ policy which was due to expire in mid May!.


#9

My reality is paying the annual in advance happens to coincide with my quarterly payment and it is $500 in my pocket because of the delay. As @karen_seager wrote I’lll be paying the increased 2018 price in March 2019 and so on. It is essentially a once off benefit. But if you pay annually in advance again in March 2019 (with the 2018 price), you are pocketing (but only delaying) the 2019 increase, so there is some financial benefit. In my case it is $500 that I will never have to pay, and perhaps a few more dollars in the future…

That is an interesting question to ask about. In my case I serendipitously changed funds a year ago with quarterly billing so this is my anniversary anyway.

Edit: Checking my member details I have discovered that they changed my payments to 6 monthly, not 1 year as entered. Ringing them the reply was they no longer accept annual payments. Smart accountants. No email but I expect some Rmail to that effect in the next week. So the savings have been diminished to half what I anticipated, but still something.


#10

Its ridiculous- so much higher than CPI
I think i have a good health fund but how can medical expenses increase by so much more than CPI?


#11

Because CPI is a most abominable crock of economic chicanery and is misused on a daily basis?

Note: the brief explanation below of how the CPI is calculated is from a layperson rather than a statistician, and may contain errors. Any errors are the fault of the reader’s interpretation of what is stated here, which is in a slightly different universe absolutely infallible.

The CPI was created as a basic means of measuring economic productivity, and was not intended to be ‘the means’ to measure inflation. It is calculated using a ‘basket’ of goods and services.

Problems with the CPI?

  1. How do you value this year’s computer vs. last year’s? This year’s costs the same, but is more powerful and has new features! So anything IT-related tends to have a deflationary effect on the overall CPI.
  2. As manufacturers of goods become more efficient (or move their plants to countries where workers are paid less), their goods become cheaper. Again - having a deflationary effect.
  3. Services - such as all the people who work in a hospital, or your GP, or the person preparing your coffee - tend not to become cheaper. Nobody wants a pay cut, and in fact most of us want regular pay increases - whether we are becoming more efficient in our work or not.
  4. Real estate. No more to be said.

The CPI is supposed to measure an ‘average’ basket of what ‘average’ people will buy in a year. Well, most of us don’t buy computers every year, let alone cars or houses, but these are included (for instance as 1/3 of a computer and perhaps 1/15 of a house) in calculating the CPI. The deflationary items in the basket do a lot to offset more inflationary items.

But healthcare…?

Well, healthcare has two major inputs: labour (doctors, nurses etc.) and technology (scanners, robotic surgeons…). The latter items will fall in price over time, but on introduction they are expensive. Labour is also ever-increasing in cost (refer to the WCI - Wage Cost Index - which varies markedly from the CPI).

There is a further problem with healthcare: demand. More people want to be healthier and live long fulfilling lives. Many Australians are getting quite old, and we have not (yet) decided that everyone over the age of 90 should be euthanised. Old people need more health care than young people (generally; there are exceptions). We are getting better at keeping people alive who would in previous centuries/decades/years have died - but the cost of keeping them alive can sometimes be incredibly high. How much does a heart transplant cost? ($139,900 in NSW public hospitals in 2014-15.) What about the lifetime of medication following a transplant, to ensure it is not rejected? Given the cost, should we turn back the clock to pre-organ transplant times?

So along with the cost of health care, the cost of health insurance - like the cost of Medicare and the PBS - is ever-increasing and is increasing faster than the CPI and the WCI.

Pretty much every media story about health insurance ignores the reality of why it costs what it costs, and why the costs keep going up, in favour of ‘shock/horror’ headlines. That at least is unsurprising.

I hope this brief explanation helps take some of the sticker shock away.


#12

One thing I do not think I have mentioned in relation to health insurance - and that also applies to other kinds of insurance as well as to mobile phone plans. And banks.

Economic theory states that the more companies competing in a market, the more the customer benefits. Unfortunately, there are ways to ‘not really compete’, and health insurers know them well. If you have ever tried to compare one set of health insurance to another, you will know that it can take days to put a value on ‘service 1’ versus ‘service 2’. This is deliberate - you don’t want customers to be able to compare your product with your competitor’s, and so complexity is the marketer’s friend.

Retailers hate unit pricing and energy ratings, because they provide the consumer with more information.

So I think one of the things Choice should be pushing for in the health insurance market is regulatory change to force comparability.


#13

You are probably aware of the standard summaries of each plan. This is ‘it’.

From a plan I walked from:

and

Every fund is required to ‘publish these’. You can find them from many sources such as the fund description pages and comparison sites. There is obviously much left to the particular PDS but it is a starter.

Beyond that they can diverge sufficiently (diverge? obfuscate?) but excepting for lining one up against another they are not exactly alike so the final comparison is left to the buyer to weigh up the +/-.


#14

I think it isn’t leaving it to the consumer to weigh up but I think it is more the case they don’t want the weighing.


#15

As we know, ignore the details and you are punting not purchasing, and disparate details cannot be compared by anyone but oneself to set personal value for each item.


#16

I wasn’t, actually - but the plan you have linked hides as much as it reveals! And then (wait, let me don my helmet before the blowback) it covers chiropractic, acupuncture and naturopathy!!! Why are health insurers paying for quacks?


#17

There is nothing special about ‘the plan’ I posted. Those are the standard forms each fund has to lodge to enable some standard comparisons, 1 for hospital and 1 for extras. Every plan has these.

Here is a random example on privatehealth.gov.au and another for your comparison. You can pick any fund you want and get these same forms.

That would be another topic to prices, if one is so inclined.


#19

I realise this topic has been running for a while, but it’s that time of year again when health funds announce their average, repeat average, premium increases. What I’d like to know is this: has anyone experienced a premium increase which is at or below the announced % increase rate for their fund? I certainly haven’t.
My fund, Medibank Private, is hitting me with a 4.5% increase vs the announced average of 3.3%
Last year, my increase was 4.15% vs the announced 3.88%.
I could look out the figures, but the disparity in some earlier years has been even greater than that.
I hasten to add that ours is a bog-standard policy, nothing unusual.
Are these genuine averages (or rather, they should be quoted as medians) which the funds announce? It seems to me that they aren’t, and that they’re playing with numbers. Lies, damned lies and statistics…


Private health insurance reforms 2019: what notification have you received?
#20

Part of ‘the package’ includes renaming from Premier to Gold in line with the government’s ‘simplification’ as well as some ‘natural therapies’ being removed from benefits per the government ‘reform’. No personal worry about that, just noting it.

edit: The Choice Health Fund comparison tool indicates the tool will be retired from 7 March. I went through it and it has the 2018 rates (no surprise), and HCI was in first place for combined hospital and extras cover, but the interesting reality was the #2 in 2018 was only slightly less than HCI will be 2019. Looking at separate policies was not rewarding as some dollars could be saved, but at the expense of the mix of benefits we use. - deuce :open_mouth:

edit: HCI states the average increase of all health funds across HCI’s equivalent products is 5.53%.


Private health insurance reforms 2019: what notification have you received?
#21

RT Health will raise their policy rates as of the 1 April 2019 on their “Couple Bronze Plus First Start Hospital $350 Excess and Value Extras” by 7.1%. . Coupled with this is the decrease in the Govt Rebate percentage, with rebate included the increase is 7.6% on the previous payments.

There has been some coverage changes on the Bronze First Start Hospital cover with mostly the changes increasing exclusions.


Private health insurance reforms 2019: what notification have you received?