People are confused by even basic health insurance policies and the $17.4 billion industry needs to do more to explain restrictions or exclusions, the private health insurance ombudsman says.
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.