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Private health insurance overhaul promises more affordable premiums

13 October 2017

Mr Hunt said the discounts for young people would have a knock-on effect for all.

Health Minister Greg Hunt has been negotiating with the sector on the changes after approving premium rises averaging 4.84 per cent earlier in 2017. For those under 30 who have never had private health insurance, a 2 per cent discount on their premium for every year before they turn 30, capped at a saving of 10 per cent, is on offer.

That discounted rate would remain until they are 40, after which it would be phased out.

The government also said it had "struck an agreement" with the manufacturers of pacemakers and prosthetic hips and knees to reduce prices.

"Eighty-four per cent of Australians with private health insurance value the product and want to keep it, however their main concern is affordability".

"I'm working with the private health insurers to help drive down premium pressures and they have guaranteed in writing they will pass through all of the cost savings". It was joined by other funds, including HCF, Medibank and nib.

According to consumer advocate group CHOICE, junk policies are a growing problem.

"We haven't seen the detail from the government on this", Choice spokeswoman Erin Turner said.

Young Australians who sign up to private health cover will benefit from discounts on their premium under sweeping Turnbull government reforms created to entice more young people into the system and slow the rising cost of health insurance.

But it's expected a cut to the price insurers must pay for some medical devices will drive the biggest reduction in premiums.

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Fairfax Media understands the government is not able to make specific predictions about how much consumers will save because of differences between policies and individual circumstances.

The Australian Prudential Regulation Authority will be tasked with ensuring every dollar offsets premium rises in 2018.

The health insurance package will also scrap coverage for some natural therapies, such as yoga, aromatherapy, Pilates and tai chi.

Insurers will also have to provide a one-page summary for their plans and re-categorise packages as either gold, silver, bronze or basic.

The ABC understands the Government has resisted pressure to dump low-priced policies, regarded as "junk" policies by some consumer groups, because of the flow-on cost it would have on other insurance premiums.

"The framework for positive reform of the private health insurance industry is now in place", AMA president Michael Gannon said, adding the fine detail of the new prostheses arrangements and how pregnancy would be covered needed further work.

The ABC believes the Government plans on generating savings of about $300 million a year through the measure, starting next year, with the money ploughed back in reducing premiums for customers.

But chief executive Leanne Wells questioned the planned discounts for younger people.

Private Healthcare Australia, the peak body representing health insurance companies, said the reforms would deliver "value to Australians young and old".

Private health insurance overhaul promises more affordable premiums