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Is this what the doctor ordered? Interested parties diagnose the ills of private health insurance & offer their cures.

The Senates community affairs references committee has held a public hearing to supplement their inquiry into the value and affordability of private health insurance and out-of-pocket medical costs.


Key issues mentioned throughout the Sydney hearing on Oct 31 revolved around:


The transparency of policies, pricing and executives salaries; so-called junk policies and their pros and cons and calls to make pregnancy and mental health services mandatory for all policies.


Health fund BUPA also claimed intermediaries added significantly to the systems costs.


Below are highlights in reported speech from some of the witnesses and senators.



Senator Sam Dastyari

The funds take in $22 billion in premiums, they pay out $19 billion. Where does the other $3 billion go?


PHI is the 17th largest item of Commonwealth spending.



Senator Richard di Natale

Asked a number of witnesses:


Has the PHI rebate which costs $6.4 billion worked in reducing waiting times in public hospitals? Many answered no.



Leanne Wells CEO

Consumers Health Forum of Australia


Fears the proposed discounts for those aged under 30 will undermine the principles around community rating

Dr Stephen Duckett, Grattan Institute

Calls the present public/private hospital system mixed and messy


The proposed PHI changes are essentially benign but not transformative and will only lead to a fractional increase in those insured esp the young.


Wants more transparency around hospital complication rates and all surgeries where there is a private contract with the consumers right to know trumping other concerns.


Agreed the $25 billion provided for the PHI rebate in forward estimates better spent directly in the public health system as a wiser investment of public money.


Advised his daughter now aged 22 not to take out PHI despite any discounts until aged 30.


People are not good judges of what might happen in the future. Its hard to know your likelihood for orthopaedic services.


Most never think theyll need help for a mental illness so leave it as an exclusion but yet we know mental illness can hit anyone at every age.


I have a junk policy as its free and Im subsidised. The cost of the policy is lower than the tax Id have to pay so I make a profit.


Its not rational health policy.



Dr Michael Gannon president AMA


Re Transparency, cover and junk policies: Wants to see an end to the tricks and the end to the horrible situation too many patients find themselves in when they are sick and only then discover they are not covered.


We believe policies in both the number (he put at more than 20,000) and details are deliberately confusing for consumers and they shouldn’t need to be a doctor or actuary to understand what they are paying for.


Out-of-pocket costs not the cause of discontent for consumers the problem is they believe they are covered but have bought a product which is useless.


Said the amount the funds pay for doctors expenses is about the same as it costs them to run their businessabout 10%


Says the shift to for-profit funds has driven much of the increase in premiums as shareholders to keep happy.


Wants all PHI policies to include maternity and psychological services.

Dr Rachel David CEO

Private Healthcare Australia

The PHA represents 20 funds which cover 96% of those with PHI. More than 13 million Australians some form of PHI and half of them with disposable incomes below $50k pa


Their surveys showed 84% of consumers on balance thought PHI represented value for money.


But top concerns 1 Affordability of the policies and 2 Affordability out-of-pocket expenses.


Says theres pent-up demand for those in their 20s for PHI and their entry into the system will keep premiums lower for everyone.


Younger people need cover for preventative dental work, sporting accidents and mental health.


On junk policies: Junk not a term we use no one has a consistent definition of it.


As long as theres been PHI theres been a basic table which covered public hospitals and only one or two additions.


It means more people contribute to the risk equalisation pool


Surveys show taking out a low-cost policy to avoid Medicare Levy Surcharge only the fourth most cited reason for having a policy.



Dr Dwayne Crombie

Bupa Australia



The cost of hip replacement and rehab between $30-$35,000 and not want to ration services.


Our own admin/operating costs 7.9% among the lowest and should be given our scale but we keep tightening our belt.


Comparators incur a significant cost on the system which he put at hundreds of millions of dollars.


Commissions can be 27% of the first year premium.


Its a failure of the system that its not obvious how much they charge in commissions or how much of the market they cover


PHI is a highly regulated area but things are not regulated here


(Writers note: The costs of intermediaries such as comparison sites are comparable, competitive and more cost-effective than other channels used by funds to recruit new members such as Google, Facebook, TV advertising, etc. They have to be as theres no obligation for funds to use the service. They chose to.

Compare The Market one of the larger comparators puts its first-year commission at 25%. For other members of PHIIA the figures vary and are often much lower. The PHIIA code of conduct insists the consumers best interest comes first and theres no conflict of interest in giving any advice around PHI.

As members of PHIIA they are required to be transparent and disclose both methods of payment and the coverage of the market.

Members are regulated by Australian Consumer Law and the ACCCs guide to comparator websites.)


Welcome empowerment of consumers but they’ll still need help

Press Release: 13/10/2017

Health Insurance Reforms Should Prompt Consumers to Check Cover


The Federal Governments reforms to private health insurance may make comparisons simpler but many consumers will still need guidance to make better decisions about their cover.


The association representing private health comparison services and agents specialising in health insurance says the proposed reforms are a win for consumers as the changes will enable more confident decision making.


But Christopher Zinn, CEO of PHIIA (Private Health Insurance Intermediaries Association), says downward pressure in prices will be slow so consumers should act now.


He says The reforms will deliver many benefits to the 13.5million Australians with cover without reducing choice or increasing costs to any of them, but they will take time to implement.


The changes should nudge all consumers into reviewing their policy and provider to ensure they not only offer value but also cover the areas were they are likely to claim, adds Mr Zinn.


PHIIA welcomes moves to increase resources to the governments health insurance comparison site but argues up-to-date data on all policies should be more openly available to all.


In line with reforms around the world and the digital revolution policy data needs to be unlocked so existing comparison services and new entrants can help in the massive task of empowering the public to make better choices around private health insurance, says Mr Zinn.


The introduction of gold, silver and bronze categories will help although the detail has yet to be seen and the changes do not come into effect for 18 months.


The decision to maintain access to the lowest cost policies means entry-level cover remains available, especially to younger Australians, which enables them to better understand their insurance needs and when necessary alter their level of cover.


PHIIA recommends that consumers only use comparison services that are signatories to it the code




For Further Information Call:


Chris Zinn Tim Allerton


(0425) 296 442 (0412) 715 707.



PHIIA Submission to Senate inquiry into PHI affordability & Value Aug 2017

PHIIA Senate Inquiry submission final

Below is a brief extract from the opening comments to the submission. It’s hoped we may be invited to appear at the public hearings scheduled for Sydney on Oct 31. Feel free to read the whole document it is not too long.

Extract from opening comments:

All members work within the terms of our self-regulatory binding code of conduct which ensures transparency, non-conflicted remuneration and adequate choice to build confidence and capacity with consumers.

The ACCC Private Health Insurance Report 2015-16states that 40% of consumers who switch their health cover do so through the commercial comparators.

PHIIA’s own data suggests that another 30% of new entrants and switchers do at least some research via a comparator service before buying directly from a fund.

We believe that the myth that commissions/fees paid to comparators somehow inflate the premium price deters some consumers from purchasing from the comparator and instead of going direct to the fund. In fact, there is no additional cost to the consumer by using comparison services. Their advice is provided to customers free-of-charge and the policy price is the same whether they go via a comparator or buy direct from a fund.

We would like to address a similar misapprehension included by BUPA in reports of their submission to this inquiry. Bupassubmission claimed comparators commissions somehow inflate the cost of all premiums for all consumers. In reality the comparators are just another sales channel, such as TV, Facebook, Google etc., among various marketing costs. In many instances, the cost of member acquisition via comparison sites is more cost-effective particularly for smaller funds than undertaking their own marketing activities and sales channels.

While not all funds choose to make their policies available to customers via commercial comparison sites, many funds do, including several of the largest and most well-known funds. Smaller challenger brands especially make effective use of comparison sites low barrier-to-entry marketing models.

In response to calls for further regulation of the intermediary sector, we would like to highlight the sector already has considerable oversight. For exampleiSelect is regulated by a number of government agencies including ACCC, APRA, ASIC and also a fully compliant member of PHIIA and are also signatory to our Code of Conduct.

We believe our self-regulated system empowers consumers and drives competition in the market in ways which enhance, rather than detract, from the value and affordability of PHI.

However, there are two barriers in particular which we believe impede the smooth flow of these positive functions. More detail is provided below against the relevant terms of reference.

The first involves the handling by the health funds of the switching process and delays above and beyond what a reasonable consumer might expect. There are also issues in terms of behaviour and statements of so-called save teams that aim to retain customers who have already elected to change provider.

The second revolves around access to data and the inability of PHIIA members to get up-to-date, detailed information on all policies, including those no longer being marketed.

Given fast-moving technological developments, it’s understandable and desirable that any regulations insist this data is available for interested third-parties in portable and readable electronic formats that facilitate genuine comparison in the benefit of customers.



Calls to regulate health insurance will only drive up costs of consumers and reduce their choices

Media Release: 21/8/2017


Calls to further regulate private health insurance by the AMA could increase the costs of cover to consumers and reduce their power to choose more suitable policies.


The industry body for comparison services, brokers and agents providing guidance around Health Insurance, says given the focus on affordability it is not in consumers interests to restrict options.


Christopher Zinn, CEO of PHIIA (Private Health Insurance Intermediaries Association), says the AMA and doctors might instead take some steps themselves to help patients to reduce costs and navigate the system. This might include discouraging booking fees and other forms of large medical gaps.


He says many consumers consciously choose lower cost insurance to allow them to retain some cover, and are well aware of what is included and what is not.


What is critical is that consumers regularly review their cover to ensure that it is appropriate for their circumstances. We agree with the AMA that it is plain wrong for seniors to be covered for pregnancy but not joint replacements or eye surgery.



But to suggest as the AMA have done the need to regulate minimum levels of cover, including those for older Australians, will only further push up the cost of premiums, he says.


Comparison services who are members of PHIIA report selling very small numbers of the junk policies and where they do making the consumer fully aware of their limitations.


Instead of the blame shifting stakeholders in private healthcare should work together to help increase its value to consumers and their knowledge of methods to pay for it.


PHIIA suggests the AMA might:


Encourage GPs to advise patients to contact their funds as soon as a referral to a healthcare professional that may result in a hospitalisation is made.


Doctors might review their booking fees, and charges in excess of the agreed fees for Medicare and the health funds, which can impact consumers far more than exclusionary policies.


Doctors should make information about their services and the amount they charge much more freely available to empower consumers and enable market forces.


Of course theres a need to reform Private Health Insurance to restore confidence and help consumers make clearer decisions but blanket regulation will work against the interests of the most vulnerable consumers and that is hardly what the doctor should order.







PHIIA, the Private Health Insurance Intermediaries Association, represents those who make recommendations to the public around policies. It enforces a consumer code of conduct to ensure transparency, non-conflicted remuneration and training.


PHIIA recommends that consumers only use comparison services that are signatories to the code


Media inquiries:


Christopher Zinn Tim Allerton

0425 296 442 City PR 0412 715 707