Health policies 'confusing'
If a policy had a restriction or exclusion, it was "incumbent" on Australia's 35 health funds to ensure members knew what this meant, the ombudsman said.
"Ideally, comprehensive policy information should be available on a fund's website so that members can easily obtain up-to-date information on benefits," the ombudsman said.
Grahame Danaher, managing director of the non-profit Westfund, said policies with restrictions or exclusions accounted for about 50 per cent of products sold, leading the industry away from community rating, in which people pay the same regardless of their age and health status, to risk rating.
But Bupa spokesman Matt Allison said restrictions enabled people to buy a policy tailored to their life stage - such as older people not paying for pregnancy cover. He said of Bupa's 27 retail products with hospital cover, 15 had restrictions and three exclusions. "Sixty-four per cent of our membership does not have any restrictions on their policy," he said.
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The ombudsman said many people are confused even by basic private health insurance policies and that the $17.4 billion industry needs to do more to explain policy restrictions and exclusions so members understand what they're buying.
Restrictions and exclusions limit what a private health policy will cover. The ombudsman wants Australia’s 35 health funds to make these limits clear to members. For everyday investors, clarity around restrictions matters because it affects consumer understanding and comparisons across products in this sizable sector.
According to Grahame Danaher of Westfund, policies that include restrictions or exclusions make up about 50% of products sold. Bupa reports that of its 27 retail hospital products, 15 have restrictions and 3 have exclusions, though it also says 64% of its membership does not have any restrictions on their policy.
Grahame Danaher of the non-profit Westfund said that the growth of products with restrictions or exclusions is steering the industry away from community rating—where everyone pays the same regardless of age or health—toward risk rating, which varies cover and pricing based on individual risk.
Bupa spokesman Matt Allison said restrictions let people buy a policy tailored to their life stage—for example, older members not paying for pregnancy cover. He also noted that while many Bupa retail hospital products have restrictions or exclusions, 64% of its membership has no restrictions on their policy.
The ombudsman said it is incumbent on Australia's 35 health funds to ensure members know what restrictions and exclusions mean and recommended that comprehensive policy information be available on a fund's website so members can easily get up-to-date details on benefits.
The article refers to the private health insurance industry as a $17.4 billion sector in Australia, underscoring its scale and why clarity on policy terms is important for consumers and stakeholders.
The ombudsman recommends that comprehensive, up-to-date policy information be made available on a fund's website so members can find details about benefits, restrictions and exclusions. Reviewing the product details on a fund’s website is the first step to understand what a policy covers.
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